How you manage your inventory of PVF parts and materials makes all the difference when it comes to controlling your costs, managing your budgets, scheduling your current and upcoming projects, and ensuring quality results across the board in your finished projects. Wholesalers have these same concerns—and you can learn a lot from how they tackle these challenges.
In this article, we’ll explore wholesale inventory management strategies and inventory optimization techniques to help you master your PVF inventory and ensure a consistent supply of the parts your team needs to build quality piping and flow control solutions.
Wholesale Inventory Management: The Basics
The business model used by wholesalers in distributing components and finished products to retailers, distributors, and end customers lives or dies on how well they employ industrial storage solutions to handle their inventory of parts and products. Effective wholesale inventory management balances the costs associated with acquiring and holding inventory against the revenue generated through sales.
What does an optimized wholesale inventory look like? It looks like always having the right amount of products or parts on hand to meet customer demand, minimizing storage costs and streamlining stock retrieval procedures along the way.
Project and pricing managers for pipe fabricators and mechanical contractors can take advantage of the principles of wholesale inventory management to build better products and complete projects faster and more cost-effectively—improving the satisfaction of your customers and clients and keeping your business competitive in your industry.
Inventory Management Strategies for Fabricators and Contractors
To strengthen your competitive posture, let’s take a look at what you can learn from wholesalers by delving into the wholesale order management and inventory management strategies they use to minimize costs while maximizing profits, quality, and customer satisfaction.
Bulk Purchasing and Volume Discounts
In our previous blog, we dived into the wonderful world of buying in bulk and examined the economies of scale that allow manufacturers to offer products at bulk pricing. Wholesalers jump at opportunities to secure volume discounts, and you too can use bulk purchasing to save on costs.
When making decisions about bulk purchasing, you’ll need to perform careful analysis to make sure the cost benefits of bulk pricing outweigh the potential risks of overstocking or higher storage costs.
Just-In-Time Inventory
One strategy wholesalers will sometimes employ to keep their operations lean and cost-effective is keeping inventory levels as low as possible and ordering parts and materials only as needed. This is, essentially, the exact opposite of buying in bulk.
While just-in-time is quite a popular strategy for wholesale inventory management—similar just-in-time strategies are used across industrial and commercial supply chains worldwide to keep pace with the speed of modern businesses—it also comes with its own risks. This strategy requires precise demand forecasting so you don’t get caught off-guard by more demand than you can satisfy, as well as reliable suppliers you trust to deliver the materials you need with rapid turnaround.
Vendor-Managed Inventory
While many wholesalers will manage their own inventory, some offload that responsibility altogether to their suppliers, not only saving but all but eliminating altogether the costs and administrative burdens of wholesale inventory management.
Since vendors are usually better equipped for and more experienced at forecasting demand for their products, vendor-managed inventory can more effectively ensure that you can get the parts you need from them.
Like just-in-time inventory management, though, this strategy lives or dies on how much you can trust your supplier to get you the parts you need when you need them (as opposed to when it’s most convenient to them, a “milk run” delivery model employed by far too many PVF distributors and suppliers).
Supply Source Diversification
Wholesalers who rely on a single supplier can easily end up in an “all your eggs in one basket” situation where an issue with the supplier spells trouble for their customers. This is an especially prevalent concern in volatile markets.
To mitigate the downstream damage a supplier issue can do to a wholesaler’s operations and those of their customers, many wholesalers are diversifying their options and landing supply contracts with other suppliers who can step up as pinch hitters when their regular suppliers face disruption.
Inventory Optimization Techniques and How to Use Them
Reaping the advantages of inventory management, especially these wholesale inventory management strategies means using specific inventory optimization techniques to make the most of them while reducing their risks. For example, pulling off just-in-time or lean inventory management practices requires accurate demand forecasting to ensure your projects don’t run into delays or budget issues as a result of an unforeseen need for certain PVF products or materials.
Let’s briefly run down some of the vital inventory optimization techniques you need to adopt winning wholesale inventory management strategies into your operations:
- Segmenting your inventory based on criteria such as inventory turnover rates, value, and demand predictability so you can focus your management on the most critical items your projects require.
- Using statistical analysis to calculate optimal stock levels for essential PVF parts and materials, mitigating the risk of demand variability or supply chain disruptions getting in the way of meeting your project deadlines and budgets.
- Establish inventory replenishment policies that set standards for when the best time to reorder materials is in order to lighten the administrative burden of reordering.
- Regularly evaluate your supplier’s performance to determine if they are still reliable in the speed and accuracy of their deliveries, the quality of their parts, and their compliance with the terms of your supplier agreements.
- Implementing real-time tracking systems for your inventory to improve your measurements of inventory levels, locations, and movements through your supply chain.
- If you have multiple locations, standardizing all your inventory management processes across your locations.
- Establishing KPIs for inventory management to measure the effectiveness of your practices and identify areas for improvement.
Build a Better PVF Supply Chain With American Stainless
If there’s one takeaway here you should pay special attention to, it’s the importance of having at least one trustworthy, reliable supplier for your PVF parts and materials.
American Stainless is the US Southeast’s leading PVF supplier, maintaining a league-of-its-own quality management system and strong relationships with best-in-breed PVF manufacturers to ensure maximum accuracy in our order fulfillment, competitive pricing, efficiently packaged and high quality products, rapid and friendly customer service, and delivery on nobody’s schedules but yours.