Blue Ridge kicked off our 2024 webinar series with the topic Strategic Inventory Optimization: Elevating Planning for Customer Satisfaction featuring TJ O’Connor from Farmington Consulting Group. In case you missed it (ICYMI), this blog will provide an overview of the key insights that were shared regarding inventory management strategies and supply chain challenges in the HVAC & plumbing distribution industry. The discussion highlighted the importance of adapting inventory management strategies to meet changing customer expectations and address supply chain challenges.
Distribution Industry Trends & Data Points
TJ O’Connor from Farmington Consulting Group shared key trends and data points related to inventory optimization and how they are shaping the distribution industry, providing insights into the challenges distributors face and the evolving landscape of inventory management. TJ shared a range of data points that Farmington has gathered, offering a deeper understanding of the current state of inventory management. He discussed the changing dynamics of customer influence in purchasing decisions. Contractors are increasingly relying on inside or counter personnel rather than outside salespersons. This shift is driven by factors such as the need for instant fulfillment and the rise of repair and replacement business in the HVAC & plumbing industry. Distributors need to involve customer-facing staff in inventory management decisions to meet customer expectations effectively.
Adapting to Supply Chain Challenges
Blue Ridge experts Tracy Coon and Nathan Harris joined the discussion to share strategies that distributors can implement to overcome challenges and enhance their inventory optimization practices. They provided practical insights into real-time visibility, demand forecasting, and inventory management that Blue Ridge provides.
Tracy emphasized the need for distributors to rank their item mix to better allocate resources. By prioritizing items based on importance and cost-effectiveness, distributors can optimize their inventory management strategies. Additionally, Tracy discussed the value of personal contact in the supply chain, noting that contractors often prefer to visit branches in person for instant fulfillment and expert advice.
Nathan highlighted the shift in contractor behavior regarding inventory stocking. While many contractors increased their inventory levels during the height of supply chain challenges, they are now starting to revert to pre-pandemic levels. This shift is driven by improved supply chain stability and cost considerations, as carrying inventory can be expensive. Nathan also emphasized the importance of data analytics in inventory management, stressing the need to know your numbers and track metrics like fill rate and forecast accuracy.
Insights from the Distributors
At Blue Ridge, we believe the questions, insights, and experiences from our webinar participants are invaluable. It was encouraged for attendees to share thoughts and questions in the chat throughout the presentation. We also included a few poll questions to gather feedback directly from the source regarding the topics addressed during the discussion. Blue Ridge believes knowledge sharing is critical to progress, so we are sharing the results from those questions below for your reference.
Audience responses shed light on the biggest challenges faced in optimizing inventory planning processes. 55% of respondents identified forecasting demand accurately as the biggest challenge, followed by balancing inventory levels across locations (30%), elongated lead times (15%), and ensuring product availability (0%).
When asked about the importance of collaborating with suppliers on planned and future orders to ensure product availability, 73% of respondents indicated it was very important, while 27% said it was somewhat important.
In response to supply chain challenges and evolving customer expectations, 56% of respondents reported that they have diversified their supplier base. 6% added lines of credit due to increased inventory levels, another 6% scaled back their customer base. Meanwhile, 31% stated that they have not made significant changes to their inventory management strategy.
Key Strategies for HVAC & Plumbing Distributors
To adapt to these changes, distributors should focus on:
- Knowing The Numbers: Understanding key metrics like fill rate and forecast accuracy is crucial for effective inventory management.
- Setting Clear Goals: Establishing attainable goals and tracking progress is essential for improvement.
- Diversifying Their Supplier Base: Having multiple suppliers can help mitigate risks and improve product availability.
- Leveraging Data Analytics: Utilizing data to make informed decisions and optimize inventory levels is key in today’s fast-paced environment.
Conclusion
As the HVAC distribution industry continues to evolve, distributors must stay agile and adapt their inventory management strategies to meet changing customer expectations and address supply chain challenges. By prioritizing data-driven decision-making, setting clear goals, and embracing new ways of working, distributors can optimize their inventory management practices and better serve their customers. Curious to learn more? Contact us for the webinar replay or schedule a demo with one of our Blue Ridge supply chain experts.
