The Top 7 Distribution Metrics You Need To Measure

Instead of viewing the last 10 feet of the supply chain as the end of the road – what if you saw it instead as a starting point: the first 10 feet of your demand chain?

When distributors give their customers our customer-managed inventory (CMI) app to track consumable inventory usage at the point-of-use and automate replenishment, distributors are actually helping themselves do better demand planning in their distribution centers. 

The eTurns TrackStock mobile scanning app allows you to do cycle counts and pulls from inventory that trigger automated replenishment orders from distributors using min/max settings. But the magic thing is that if the majority of a distributor’s top customers use the TrackStock app for CMI replenishment, the distributor collects real-time usage data at scale faster than is possible with any other technology -- and use it for profitability. 

Distributors can leverage this actual customer demand data collected at the point-of-use – using the TrackStock Precise Demand Planning™ Solution – to optimize their own distribution centers, reducing carrying costs and improving customer service at the same time.

Imagine if you were able to apply this idea for your very important customers (VICs), which comprise roughly 20% of your customers but 80% of your revenue. TrackStock would provide you with these distribution KPIs:

• Which items the very important customers are going to order
• The quantity they will order of those items
• The precise date those items will be ordered

And all you need to calculate those valuable distribution KPIs are a few critical inventory metrics by item, tracked at the point-of-use:

• Quantity on Hand (QOH)
• Minimum Stock Levels (Min)
• Maximum Stock Levels (Max)
• Average Daily Usage

The good news? eTurns TrackStock already does this.

A customer’s optimal minimum and maximum inventory levels are calculated and adjusted within eTurns TrackStock, and measured along with usage for a particular item. These dynamically adjusted mins/maxes allow a customer to take cash out of inventory and eliminate stockouts. And aggregated across a distributor’s VICs, a distributor can use this data to fine-tune its own inventory management.

Why Precise Demand Planning Works: It Has Actual Usage Data from the Customer's Point-of-use, Not Historical Order Data

It’s simple and powerful. Precise Demand Planning is a dramatic shift in how many distributors serve customers: from “just in case” to “real time.” Many distributors overstock to protect themselves, whether at their own locations or their customers’.

Historically, most distributors have relied on generic forecasts based on aggregated past orders. While efforts are being made to improve upon that historical data with seasonality, economic order quantities and other methods, distributors should be skeptical of depending too much on order data, which doesn’t necessarily (and usually doesn’t) reflect actual usage.

Distributors also tend to incorporate sales reps’ forecasts, based on reports of expected purchases, into their planning. We don't blame them – you need to use the data you have to get as close as possible to the stock levels that are required to serve your customers.

But technology exists now that allows you to get a much more granular view of actual customer usage. With data gathered in real-time at the point-of-use, distributors can take a much more proactive approach to demand planning with fast-turning items, consumables that must be continually replenished.

A distributor needs as little as 45 days’ worth of data from these VICs to start. We frequently see that many of the items distributors are stocking for customers haven’t even been used in that time frame. That’s a sign that quantity on hand for those slow-turning items can be reduced at customer locations – or removed altogether and placed in a nearby distribution center for servicing.

For the remaining frequently replenished items, distributors can help customers optimize their stockrooms with eTurns TrackStock and spend less. We’ve seen reductions of up to 73% in customer cash spent on inventory and carrying costs. Not only are distributors creating a stickier relationship with their customers, they are maximizing service levels through fine-tuned operations. Demand is no longer a forecast, but a known quantity of items and order dates.

How Precise Demand Planning™ Helps Distributors 

When distributors offer their customers the eTurns TrackStock customer-managed inventory (CMI) app to control and automate their consumable replenishment at the point-of-use – using phone scans and sensors – distributors gain real-time visibility into customer inventory usage data at the point-of-use that they cannot get with any other technology. 

And by using TrackStock in this way, distributors can take advantage of the Precise Demand Planning™ Solution that helps them better service their customers’ needs, ensuring that they have what the customer needs when and where they need it – and nothing more. The cash distributors are saving by not overstocking can then be re-invested in other areas to improve the customer experience.