The replenishment in Thailand
Like many international entrepreneurs, you may have chosen Thailand as a supplier. With a quality workforce and at a very advantageous price, the country of Siam is the ideal place to do business.
Whether it’s clothing, footwear or electronics, you may need to make frequent orders in Thailand, so you can manage your stock and replenishment.
What is replenishment?
The principle of replenishment is simple. It is a matter of ensuring that your merchandise is renewed, whatever it may be, to avoid any stock shortages in store (physical or online). It allows to anticipate the demand of the customer to best meet his expectations. It allows to favor the purchase in point of sale, which will engender the satisfaction and loyalty of your customers.
For example, you are marketing a product that is imminent and important and that you did not anticipate. In a few days, you may have to deal with a stock shortage.
To avoid wasting time by setting you on Asian schedules or by trying to communicate with a supplier who does not speak Shakespeare well, Siam Shipping can help you manage your replenishment.
Your sole mission will be to contact us by e-mail or phone, to give us the details of your supplier, the product and quantity you wish to order and the address where you want us to deliver it to you. Then we take care of everything: contact, order, freight, customs clearance and delivery.
We respect the deadlines and the mode of transport you prefer, to ensure a timely delivery so that your activity can continue to run at full speed.
4 Inventory Replenishment Tactics That Increase Profits
Every company distributing products always seeks to avoid having no more arclicles available to its customers especially when it offers a lot of article. She tries to always have stock or back order. But you have to know that stocks can be expensive and this leads to short-term sales losses. In the longer term, we talk about loyalty problems. More stocks will be empty the more you have to renew, purchases will be made to meet the needs of customers.
But not everyone can afford to buy a large amount of additional product, as is the case with distributors. One of the reasons is the relatively high cost of transport, which is cutting the margins for businesses. So it’s harder to keep a fairly consistent inventory for customers.
With this article, we will learn more about the different replenishment processes that will enable you to improve your profits.
Financial Considerations of Inventory Replenishment
For wholesale distribution, companies make small margins and a key factor of success is in the optimization of stocks. The company will be very careful that its business is profitable, it will be the role of the Chief Financial Officer (CFO) or, for example, the CFO. It provides for a financial strategy in agreement with those responsible for procurement to ensure the best possible financial returns. Stocks must be answered as quickly as possible. The inventory management system is a very important tool for companies, it allows better financial management of stocks and also an inventory analysis and financial reports.
There are people who deal with the purchase of stocks, they are buyers. They seek to have the best price possible, so they must negotiate a lot to maximize the product sold by the company. The moment the product is purchased is also important so as not to interrupt the distribution to customers. The inventory must be adapted to the needs of the customers, so we must anticipate. Anticipate the customer’s behavior and future sales that you will realize, indeed the stocks will always have to be enough not to interrupt the cash flow. Many mistakes can be made in this area. We can talk about the bad application used by companies that lack functionality and that will give a bad forecast and this will increase your margins of error. It is necessary to have an excellent mastery of these software like excel for example.
Operational Considerations of Inventory Replenishment
The chief of operations or also called the director of operation is sometimes contrary to that of the director of finance. Indeed, the operations manager must ensure that the operational part of the company will meet the various requests of the customer. All the staff operation will ensure that the delivery of all orders is delivered in a timely manner, it will also monitor the delivery rate of service or the fill rate of orders.
The delivery rate that seeks to be attaint is between 95 and 100% of all orders. In general, these objectives are met because the company has some experience feedback on the practices of replenishment and stock purchase from its suppliers. It can also have excesses of stock, that is what it wants to avoid at all costs the manager of the operations. It will also ensure that the transaction is flowing well, ie no errors, breakages or complaints that may harm the image of the company.
The inventory turnover rate is a given that is also important, it is the inventory manager who will calculate it. We can see if the stock is rotating and thus we avoid the obsolescence of stocks. Stocks should be controlled as little as possible.
Common Replenishment Challenges for Wholesale Distributors
For non-perishable products, its distribution operates at more restricted profit margins. It is therefore necessary to minimize as much as possible the blows, ie to have a logistics organization as perfect as possible and thus have the most profitability. Some variables do not go in this direction. Indeed, they go against profit and performance:
- Delivery times are variable: supplier delivery times can have an impact on a company’s profitability. Despite having a trusted supplier it is always possible to have unforeseen or disruptions in delivery. If your stock is unavailable at some point this can have negative repercussions on your business and the relationship you have with your customers. It is therefore necessary to have the best stock management possible to be able to satisfy your customers.
- Maintenance of the security stock: the customer can make an urgent request without notifying you in advance, it is a Just In Time delivery that will be asked to you. These demands are very difficult to predict and to anticipate so it is necessary to draw in the emergency stock. But these items must be kept to guarantee customer demand. Siam Shipping will be able to advise you on prioritizing your products so as to avoid these problems
- Minimum / maximum quantities of order level: this is an inefficient way to buy. In fact, ordering a minimum quantity will reduce your transport costs but the storage costs will increase. The maximum quantity of an order will also increase transport costs and delivery times. What you need to know is that you will probably offer too little stock to meet the demand. Your supplier will force you to buy too much which can result in excess inventory or even an obsolete inventory.
- Excess inventory (on stock): Too much stock is not something good for your business, this will negatively affect your profitability as well as your cash flow. But if the demand for the items arrive, managers left with an obsolete inventory must be removed as if it were losses for the business.
- Stock Outs (Back Orders): Not having stock may also not be right for you and customers may be disappointed. This will lower your customer loyalty, and strengthen the credibility of your competitors compared to you. Stocks will also cancel cash flow and this can lead to expensive arrears.
- Obsolete stocks: if you have badly planned your stocks these can become obsolete if they are not ordered by customers through lack of demand. Time passes and the stock no longer has the value it could have at the beginning. It is therefore necessary to sell it expensive to cushion the bad investment made earlier. Your company will find its profitability reduced and this will be very disappointed on the part of the management and the shareholders.
Increase profit with replenishment
We have seen the major problems that distributors may face. Now we will see the 4 main components of the stock replenishment practice to limit costs and increase the profitability of your products.
- Know when to order more inventory: it is necessary to know well the delays the order frequencies of your customers etc … The experience that you have to have of previous sales must serve you to that, the seasonality also plays an important role in the Rotation of your products to predict the sales you are going to make over a specified period. You will ensure that old stock is sold before a new order is placed. But keep in mind to keep a small amount of security stock to respond to any unexpected orders or in case of delay of arrival from your supplier.
- Know exactly how much inventory to order: all your products do not sell at the same rhythm, some faster than others. The performance in terms of sales of your products will be able to serve you to know how will react the market so as to have a number of product that will stick the most to the reality of the market. The businessman who manages these products in particular will be for you the indicator indicator to talk about the sales evolution of these products in the short and medium term. The seasonality should not be forgotten; it is something very important for the sale of stocks perfectly meet the demand of customers. A common distributor’s error is not to take into account the life cycle of the product. There are several life stages of the product, birth, growth rate, decline and end-of-life. It is necessary in your inventory to follow these steps of the product cycle to be as efficient as possible in the rotation of stocks and exedents.
- Monitor and measure the performance of the supplier: when you are looking for a new supplier you often choose it according to its price. But there are many other very important factors in choosing your supplier. For example, we can talk about the flexibility of a supplier in ordering your products. Delivery times are also something to watch closely to track the delivery history and be able to inform and satisfy the customer. This will also reduce the variability of overall costs in your supply chain. Negotiating on the price with your suppliers on your orders is also a real plus. The best thing is to have a system that analyzes the performance of your suppliers to be sure that your chosen supplier is the best for your business.
- Use a multi-location inventory redistribution: some operations are multi-warehouse operations, some of these warehouses may be in excess of inventory or others may have difficulty delivering products to all orders due to High turnover rates. It is therefore best to redistribute the turnover rate equitably across all warehouses to optimize inventories while maintaining service levels. By redistributing redistributions, some stocks are also removed at optimal levels. These practices also make remove some scout provider supplier relationship. Your inventory in your warehouses will free up cash flow while limiting the risk of stock obsolescence.
Trends in Wholesale Distribution Inventory Replenishment
Daily inventory accounting, by enterprise resource planning systems, is something important in an inventory. This is one way to monitor the financial resources of the company. Wholesalers who distribute products seek to have a competitive advantage and require an important competitive system.
The solutions for optimizing inventory operations aim to reduce costs in the supply chain while guaranteeing responsiveness and thus customer satisfaction. Siam Shipping will be able to help the heads of companies in order to manage the replenishment of stocks as efficiently as possible. We will help you monitor your inventory in real time to improve the process of operations.
The planning capacities of the goods are extended by optimizing its inventory. Multi-location redistribution matches inventories to customer needs by keeping opportunities to serve customers in goods. The stock is therefore returned regularly by releasing the working capital to be invested elsewhere in the company.
Some software can manage your inventory and help eliminate surplus stocks, which will reduce the cost of transporting the stock. When we eliminate our surplus stock we reduce our cost of storage. The automation of the management software will also reduce the number of personnel for inventory management. The warehouse operators will also be more efficient.
As for the obsolescence of the products it can be managed by monitoring the historical data of the products. That is to say to know well their life cycle to better make them profitable for the company. To optimize this system we can launch alerts in real time on mobile phone to be as reactive as possible in order to limit the financial losses.
Compliment Your ERP with Optimization Software
ERP is an important part of managing a business, the inventory management system ensures the efficiency of this inventory and the overall general operating system. Inventories will affect other factors such as staff levels or transportation costs and also human resources.
There is thus an interdependence between the levels of inventory on the functioning of distribution operations. ERP systems must be linked to inventory optimization solutions. This is completely complementary to the ERP system and is integrated into existing processes.