A blog sharing five points to consider when looking at how to optimise profitability in your wholesale distribution business.
Increasing profitability is one of the key objectives for any business. This is especially true for wholesalers where margins can be thin, and it is even more important to make sure you are doing all you can to squeeze as much profit out of every transaction. Achieving greater profitability, however, isn’t always straightforward – there are a lot of moving parts in wholesale distribution.
Additionally, the changes implemented by competitors can also affect a business’s profitability. It is therefore important to look at your value proposition, customer acquisition strategy, and operations model – to help you decide what could be potential areas for improvement.
Wholesale distribution is one of the most competitive B2B industries, and with more than 7,000 distributors competing for business, it’s no wonder that margins are being squeezed.
The following five points will help you identify areas for improvement and how to go about ensuring you optimise profitability:
Automate your chargeback process
When you factor in how much time and money you spend on managing orders and chasing up payments, it’s clear there has to be a better way. Automating your system for chargebacks and rebates can save you the time you’d otherwise spend logging sales, transfers, payments, and transactions, so you can focus more attention on what really matters – letting your customers know just how great your products are.
Perform analysis of your cost-to-serve
Analysing your customers based on the cost-to-serve them, is an excellent way to determine how your organization can be more profitable. This allows you to figure out which of those customers should receive the most attention as you attempt to maximize profits for your corporation. When this type of analysis is performed after a sales lead is obtained, there is potential for greater profitability.
Improve your supplier relationships
The importance of suppliers with regards to modern business has increased considerably over the years. It’s important to find the right suppliers for your business and build a good relationship with them. This will improve your discounts and terms for purchases, but more importantly it will improve the quality of service you receive. However, vendors change so you must ensure that you uphold this relationship by continuing to buy from them while being productive and servicing your customer in society. By establishing and maintaining a partnership with suppliers, service providers can streamline their business, gain a competitive advantage, and increase profitability.
Integrate your planning & execution
Working at a business means making decisions and executing on those decisions. Your strategic plan needs to be implemented and sometimes requires course corrections as the business evolves. This makes it imperative that you make data-driven decisions, which you can do by integrating planning and execution. By integrating these two aspects of business, you can streamline your operations, make smarter time-sensitive decisions, and get a real-time total view of your whole business.
Enhance your inventory management
Inventory management is crucial to ensure the stock you buy has the highest profit margin possible. By monitoring prices and trends, you are able to determine when goods are cheap so you can buy a lot of them and sell them for a higher price in the future. This real-time view of your inventory gives you the advantage over companies that do not have the same information.
SAP Business One industry edition for Wholesalers offers you the perfect for all your business functions: Sales, Purchasing, Inventory Management, Channel Management and Customer Service and provides you with an integrated view of your company’s data. You can easily analyse all your spending and see which customers offer you the best terms and profits. By automating chargebacks, you can save time and effort chasing payments. All of which can help optimise the profitability of your wholesale business with less effort.