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5 Cost Saving Tips for Distributors

Nov 8, 2016 8:14:00 AM / by Brian Paulson posted in distribution accounting

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The distribution industry has changed dramatically over the last decade. New technologies, changes in the economy, and labor challenges have some small distributors scratching their heads, looking for solutions to save money and increase revenues. One area small distributors can improve cost savings is in their supply chain.

Cost Saving Tips for Distributors:

1. Demand Forecasting

To avoid overstocking inventory, distributors can save a considerable amount of money by implementing a demand forecasting system. In small organizations, inventory managers often wear many hats. The effect of even a small amount of wasted time is compounded in smaller organizations, and can distract from more profit-oriented activities.

2. Purchase Order Planning

Distributors spend a lot of time monitoring inventory, determining what they have on hand, what they need to order, and how much they should stock. Proper purchase order planning helps buyers streamline the process, reducing labor hours and costs.

3. Reduce Carrying Costs

Carrying costs soak up profits. One way to ease carrying costs is to reduce stocking levels. However, the overarching goal of your company should be to maximize long-term profits. Any efforts to reduce inventory should align with your business goals.

4. Warehousing Strategy

Warehouse operation plays a significant role in the advancement of distribution companies. Begin creating a strategic plan for your warehouse by evaluating the facility, equipment, procedures, and staff. Are there any inefficiencies that need to be ironed out? Identify potential solutions for long-term growth and cost savings over time.

5. Business Advice

Having a trusted financial advisor on your team will allow you to make informed business decisions. Don’t simply rely on your gut. Use a trusted accounting service that provides unlimited business advice in all aspects of your distribution business to achieve lower costs and higher revenues.

NOW ACCEPTING NEW DISTRIBUTION CLIENTS CONTACT US FOR A FREE CONSULTATION >> 

Brian Paulson

Written by Brian Paulson

Brian received his Bachelor’s degree from the University of North Dakota with a double major in accounting and financial management. He’s a member of both the National Society for Tax Professionals and the National Society for Accountants and serves on the board of directors for the Professional Association of Small Business Accountants.

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