The Cash Stock Dilemma

7 Ways to Overcome the Cash Stock Dilemma with Sage 200

Overcoming the Cash/Stock Dilemma With Sage 200

As an Award-Winning Sage Partner and expert in the field of distribution, we thought we’d share our thoughts on the cash/stock dilemma, which is something that many warehouse and distribution businesses struggle with, and this is often because they don’t have the right software to manage all the requirements they have. Critically, it’s about the left hand knowing what the right hand is doing. It’s about keeping all departments in tune with each other, so that the warning signs appear before reaching full impact.

 We’ve summarized 7 considerations for this cash/stock dilemma below. If you’d like to read more on this topic, why not download our Cash Stock Dilemma e-book and learn more about how Sage 200 can help address these critical challenges?

Inventory Levels and Forecasting

Balancing stock levels can be tricky. On the one hand, overstocking means you’ll be tying up cash in stock that doesn’t turn quickly and it can prevent you from investing this cash elsewhere. On the other hand, understocking means you may lose business due to insufficient stock levels and miss out on future orders due to customers going elsewhere. Understocking can result in you having to pay higher prices to source from an alternative supplier to fulfil orders too.

 

Courier Tracking

When distributors don’t have all the dots joined up with their couriers, it can lead to time-consuming, messy and inefficient processes. It also makes it more difficult to keep customers up-to-date with expected delivery information which can result in dissatisfaction and cause customers to take their business elsewhere, impacting your bottom line. The last mile delivery optimisation is crucial and the more integrated your courier process is, the more efficient your operation will be with a noticeable reduction in customer queries regarding delivery times and dates.

Pre-Allocations and Prioritisation

Many distributors will create purchase orders and then when the stock comes in, their system will allocate items based on the sales order date. However, this isn’t always the most efficient way to do things and it can cause problems. Getting this bit right and having a pre-allocation system in place can help keep your bottom line healthy.

 

Container Management

The uncertainty that comes from not being able to track containers, compare provisional dates with actual dates and automatically update all purchase orders, will have a direct impact on the customer experience.

Procurement

From our experience, many distribution organisations operate ad-hoc/semi-automated procurement processes. For example, items can be purchased without proper item codes (e.g. miscellaneous), goods can come in be placed in the wrong location such as an aisle, shelf, bin or even warehouse, and inspections that should be carried out systematically can be somewhat hit-and-miss. Purchase authorisation rules can often be loose or sometimes even too rigid and cumbersome resulting in productivity losses. Continuing to operate like this can result in many problems.

As procurement is a critical piece of the of the distribution/supply chain puzzle, it’s important that this it’s managed correctly.

 

Sales Orders

Similar to the procurement process, managing the sales order process is critical. The secret is having a process that is both seamless and efficient, where the sales/administrative operative has all the relevant information right in front of them. Mistakes made at the sales order entry stage will be carried through to procurement, despatch, finance and customer service, so a reduction in errors will have a positive impact on the bottom line.

It’s about having access to the right data at the right time. Simple things like accessing historical orders, copy lines, view back orders etc, can cut down on unproductive time and will reduce the margin for error.

Warehouse Management

The right software can make it easy for warehouse managers to manage everything from picking and despatching orders to writing off damaged stock and transferring stock in the warehouse. The tools available to them will make their day-to-day responsibilities much easier and they can ensure that nothing important is being overlooked. Having fully integrated processes and access to real-time stock updates can enable quicker and more accurate stock picking, resulting in fewer returns, as well as quicker and more accurate stock receipting, resulting in better stock accuracy.

 

The right system to fit your distribution business

We’d love to share our e-book with you on this very topic. In this e-book, we discuss these challenges as well as ways that our Sage 200 Warehouse Management system can help overcome them.

We pride ourselves on helping customers by recommending software that makes it easier for them to do business.

 

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Transforming Business Operations with Sage 200 to Overcome Inefficiencies

Key Challenges for SMB Distributors

SMB Distributors in 2023 – Challenging times

SMB distribution businesses are an essential part of the business landscape, providing an extensive range of products and services to organisations in the small and medium business (SMB) sector. Distributors are a reliable and cost-effective resource for growing businesses, helping them to reduce their costs and increase their efficiency whilst meeting the needs of their customers and delivering a reliable service.

Although they play such a key role in the success of small and medium businesses, distributors face many challenges to remain successful and competitive. Both external and internal challenges impact the day-to-day operations of SMB distributors, and being aware of these common challenges can help them to better prepare and manage their business.

Below we have explored just a few of the most common external and internal challenges SMB distributors are facing in 2023. For a more detailed review of these challenges, download our free e-book on this topic.

When it comes to external factors, there are a multitude of challenges that can crop up out of the blue. We’ve seen how new threats can come stem from nowhere without much notice. We’ve had a few years of global challenges with knock on affects for distributors from economic downturns to energy crisis to technological advancements, and unfortunately, things that are outside of SMB distributors’ control can have a big impact on their bottom line.

E-Commerce

Changes in the way consumers shop are having an impact on SMB distribution businesses. Advancements in technology and the increase in e-commerce websites gives manufacturers the option to ship directly to consumers, sometimes even taking the distributors and retailers completely out of the equation. Changes in consumer demand can also impact SMB distributors. We’ve also seen shifts in customer demands over the past few years. Remaining agile and relevant is fundamental for any distribution business.

 

Knowledge of your Consumer

There was a time when businesses knew their competitors inside out. They knew everything about them and knew how to compete against them. Today, the landscape moves so quickly, that new competitors can spring out of anywhere. Competitors don’t necessarily need to be built on the same model as more established businesses, in fact newer competitors are more than likely built with technology and agility at its core. New entrants will prompt distributors to raise their game and force, with less focus on price and more focus on customer service, reputation and availability of product.

Internal Challenges

From an internal perspective, challenges can present themselves from many different angles including staffing (shortages and skill-set alignment) and systems and processes. While we can’t control all the external challenges, we do have control over the internal challenges such as cash flow and profitability.

 

KPI’s

Having up-to-date insights and clearly being able to see what’s happening with your finances is paramount. Yet, many SMB distributors don’t have sufficient data to run their business.

Planning and Forecasting

Data is a hot topic now. It’s essentially about knowing instantly what’s going on in your business, removing the guesswork. It’s about forecasting and planning with as much precision as possible. It’s about knowing what to order and when (based on accurate data) to avoid cash flow or customer service headaches. It’s about spotting potential issues and mitigating these issues before they become a real problem.

 

Cash Flow

Miscalculation of the cost of goods sold is also a big issue for distribution businesses. This can lead to overpayment of taxes and shrinking profitability, and having a good overview of cash flow is imperative. Some distribution businesses are not able to determine profit by item either, which is crucial to ongoing success. And finally, the practice of ad-hoc pricing is far too common, putting margins at risk, where price bands or customer-specific pricing isn’t being set.

Overcoming Challenges with Sage Small Business Software

Environmental concerns, cybersecurity risks, regulatory requirements and technology are all high up on the agenda for many distribution companies. Navigating through these challenges requires flexibility, accurate data and a proactive approach, helping to turn these challenges into opportunities.

Here at Envisage, Award Winning Sage Partner with expertise in Sage 200, we help businesses implement intelligent, powerful and game-changing Sage software solutions, and we can help you to overcome the challenges that your distribution business may be facing. Should you have any questions about how Sage 200 software can propel your distribution business to the next level, contact our experts.

Key Challenges for SMB Distributors 2023

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