Tour de Supply Chain: Wholesale & Distribution

With the Tour de France approaching, team GB continue to insipre cyclists all over the UK. With team GB’s triumph in the last few years, more and more of us are getting back on the saddle. In fact, according to British Cycling, we are now one of the most successful cycling nations in the world. However, as Brexit jitters grip the cycling industry and the value of the pound continues to plunge forcing up the cost of imports, for cycling wholesalers and distributors, the next 12 months could be a real uphill struggle. How can businesses manage the supply hurdles that lie ahead in order to keep pace with evolving customer demand?

While the UK is Europe’s second largest market in terms of bicycle sales, British-based distributors are hugely dependant on global suppliers. Given that a staggering 95% of all bikes in the UK are imported from abroad, it seems that the fall in the value of the pound has already started to have an impact on businesses. While imports are anticipated to decrease by as much as 11% in the coming months as bicycle distributors feel the pinch of increasing supply chain costs, supply issues are not the only challenge faced by the industry. Although demand for bikes and accessories remains strong, it seems consumers are shifting towards more premium products as well as new technologies such as electric bicycles.

The question for businesses now is how they can protect their operations from the impact of external factors such as Brexit and currency fluctuations while still exploiting the full value of a buoyant bicycle market in the UK?

What are the main reasons for keeping inventory?

Once upon on a time, bicycle wholesalers distributed just that: bikes! If you look at any of the major distributors today, however, it is evident that this is no longer the case. In an attempt to stay ahead of the market, many wholesalers not only offer an extensive range of bicycles but also a huge variety of parts, accessories, and clothing. While managing all these different products groups is a challenge in its self, businesses must also cater for the growing number of different consumer groups each with their own specific requirements and expectations.

While this approach enables businesses to provide customers with a huge amount of choice, managing such a large number of items brings with it its own range of challenges. Given that every item will be subject to its own individual demand pattern, managing such large assortments places planning teams under a huge amount of time pressure: not to mention leaving the entire organisation exposed to high supply chain costs and crippling cash flow issues.

With many 000s of items to manage, it’s vital that distributors have clear insights into demand history in order to determine which items should be included within the assortments as well as to determine the optimal service levels. However, to do this, supply chain teams must be able to analyse each item quickly and accurately in order to ensure effective decision making across the entire assortment. Through using these insights to automate as much of the inventory management process as possible, supply chain leaders can, in turn, focus their time and attention on items where it is required most.

Product lifecycles: The uphill struggle

To add further complexity, distributors must also keep up with ever-evolving product lifecycles. Given that manufacturers regularly release new and updated product variations as well as entirely new lines, distributors have little choice but to constantly update their portfolio or risk being left behind by the competition. Equally, with so many items within the assortment, at the other end of the product lifecycle, it’s vital that businesses have the ability phase out end-of-life items with minimum disruption and cost to the business. Consequently, achieving the optimal inventory levels for every product at each phase of the product lifecycle is often easier said than done!

Effective Product Lifecycle Management is all about adopting the right strategy for every phase. As a result, it is vital that businesses are able to track how products move through the product lifecycle in order to apply the most suitable approach to inventory management.

Given that poorly managed product lifecycles can result in missed sales opportunity, excess stock and obsolesce, it vital that distributors take steps to stay one step ahead of evolving demand patterns.

Supplier management: Keeping everyone on track

For many distributors, much of their inventory is sourced from a broad range of global suppliers. In fact, according to HRMC, some 87% of all bicycle imports are sourced from outside the EU with Asia making up the bulk of the supply! When you consider the sheer distances that these supply chains encompass, managing these supply chain partnerships is a huge challenge for wholesalers and distributors.

With varying lead times, order costs as well as different supplier calendars to contend with, supply chain visibility is essential in harnessing collaborative relationships that are capable of keeping up with the operational demands of the business. Through sharing forecasts, this can go a long way in terms of helping upstream supply chain partners to align their operations in order to meet expected demand. However, in order to collaborate effectively, distributors must be able to generate accurate forecasts which are a true reflection of likely demand. After all, a wobbly forecast really does not help anyone!

Customers: Cycling the supply chain for everyone

A typical bicycle distributor’s customer base may encompass everything from multinational retail chains to webshops and independent stores. Given that purchasing behaviour will differ hugely between different customer groups, it’s important that distributors take this into account when making supply chain decisions.

Take for example, electric bikes: While overall demand for these innovative products is growing, for distributors, this demand could be made up of anything from a huge number small customer orders to just a single big order from one customer. In the latter scenario, managing the expectations of just one customer may sound preferable to managing the needs of many. However, what happens if the customer suddenly decides to abandon the product in question?

With a warehouse full of stock and no other customers to pick up the demand, distributors could unexpectedly be left with a huge amount of excess stock, tying up invaluable working capital and increasing the risk of obsolesce. When you consider that one of the biggest retailers of electric bikes (and consequently, one of the largest buyers of electric bikes) recently took a sudden decision to pull out of the Irish market following legal concerns, this is a very real issue for the industry!

To make informed inventory decisions, distributors must have a complete understanding of demand. However, to do this, planning teams require tools and technologies that take can take into account data at a transactional level in order to accurately distinguish between different customers. With this insight, distributors can align their operations to the “true “demand of their customers. This, in turn, means businesses can focus their investment in stock on the products that matter most to customers while simultaneously mitigating the risk of excess.

Outpace the competition with Slim4

Thanks to the accurate analysis and forecasting capabilities of Slim4, some of the biggest names in cycling have utilised Slimstock’s inventory management tool in order to drive the performance of their operations. With greater insight into their inventory situation, distributors and wholesalers become better positioned to make informed inventory management decisions. Thus, enabling supply chain managers to reduce stock levels and inventory costs while simultaneously improving availability to over 97%.