Overview

Procurement challenges in the wholesale industry are connected to a buyer’s ability to obtain a high volume of product for the most competitive price. This can be achieved through accurate product information and the maintenance of balanced inventory levels. Wholesalers and distributors need effective tools to facilitate the purchasing of timely, competitively-priced orders. Companies buying in bulk will experience greater operational success if they use technology that is targeted to meet their many needs.

The two main kinds of wholesalers include service wholesalers (distributors) and merchant wholesalers. Both types face tremendous challenges in procurement, including erratic supply & demand, increasing globalisation (causing multiple sources of supply chain data), and a lack of opportunity for systems integration. On a broader level, these issues often result in item quality variations, late deliveries, and the buyer overpaying. These effects can be catastrophic for wholesale companies reliant on a high volume of consistent quality products that arrive on-time, and at an affordable price.

This report will outline procurement struggles in the wholesale industry and provide direct solutions for organisations of all sizes.

Challenges

Merchant wholesalers are primarily involved with raw materials and/or commodities, and price negotiations
are typically the most important factor in each transaction. By comparison, service wholesalers (distributors) deal with branded products, and quantity negotiations are most important for each contract period. Both kinds of wholesalers handle a high amount of inventory, which is one of the greatest risks to these companies. This means that wholesale buyers are frequently stuck between sales and finance departments: sales needs to have enough stock available to meet spikes in demand, whereas finance must avoid inventory that becomes out-dated and unsalable, resulting in a negative effect on profits.

In order to optimally manage inventory, wholesale companies need to constantly monitor the quality of their purchases. Problems arise when no standardised descriptions of quality specifications are available. As a result, buyers receive orders that do not meet their requirements, wasting time and money. The entire shipment may be unusable. Without a system to document the terms and conditions of an order, supplier compliance cannot be guaranteed. To further exacerbate these challenges, many struggles will continue indefinitely if records are not available to make note of unsatisfactory transactions.

Deliveries that fail to arrive on time can create stock outs and back-orders. A service wholesaler that cannot regulate the quantity of its products, especially when these products must be sold in bulk, will lose its customer base. These unreliable deliveries
are typically caused by a lack of standardised descriptions for delivery time and address. As with variations in quality, deliveries also suffer without proper terms and conditions to ensure supplier compliance and the recording of discrepancies.

The third significant challenge in wholesale and distribution procurement involves buyers inadvertently overpaying suppliers. Naturally, wholesale buyers are looking for the lowest possible price from suppliers, but suppliers are prone to increasing their costs to reflect commodity market prices. Buyers will be unable to tip a purchasing strategy in their favour if software doesn’t allow for supplier negotiations (particularly important for merchant wholesalers), target price setting, order consolidations,
delivery tracking, and more. To make matters worse, many procurement applications that offer “solutions” are unaffordable, demanding separate costs for licensing, implementation, training, and ongoing maintenance.

Solution

Wholesale procurement challenges such as item quality variations, late deliveries, and overpaying can be minimized, and in most cases avoided entirely, through the implementation of Tradogram. Solutions provided include an informative items database, a comprehensive deliveries tracking process, superior negotiations, and smart categories management, plus many others.

Variations in item quality can be eliminated with Tradogram’s Informative Items Database. All products and services have fields to add (and modify) necessary details such as colour, orientation, size, etc., so suppliers know exact order requirements. For additional precision, buyers may also choose to import item details from a spreadsheet, and then sort items by name, category, or most recently purchased. Providing fields for a high level of detail ensures that item quality variations are nonexistent.

In order to avoid late orders, Tradogram has designed a system for Comprehensive Deliveries. This means that buyers receive complete shipping notes indicating delivery dates, quantities, and other relevant info. Suppliers are able to easily meet buyers’ requirements due to Tradogram’s automatic sorting of delivery information. The buyer has two options: they can request
that suppliers complete shipping notes, or just add shipments and log items as they are received. This means there’s never any confusion about the status of a delivery – buyers also receive an alert once a supplier has added a shipment note. Additionally, Tradogram’s receiving features allow users to book-in received items, make note of missing or rejected items, and specify plans for internal distribution.

The unintentional overpaying of suppliers is a challenge that can be solved with minimal effort. Tradogram provides a platform for Superior Negotiations: offers can be edited (changes will be highlighted), and prices and specifications can be compared item-to-item or supplier-to-supplier, with the chosen currency and UOM. With features like these, the chance of overpaying a supplier due to a lack of information is minimised. Over-payment due to delays or discrepancies is also greatly reduced when only the best suppliers are used due to regular evaluations completed on suppliers using scorecards.

The communication process in wholesale procurement cannot be underestimated, especially for an industry reliant on large quantities of product for the most advantageous price.

Tradogram Understands Wholesale

Wholesale and distribution companies using Tradogram are able to experience the benefits of planning and communication to achieve improved purchasing control. The proper tools allow item quality variations, late deliveries, and overpaying to be easily solvable. Wholesale businesses are confident in the quality and reliability of their shipments.

Tradogram’s application is low-cost, easy to implement, and can be accessed from every device and location that has internet capabilities. No need to wonder about the status of a delivery, or whether or not an item was priced fairly according to quality specifications.

With Tradogram, communication between buyers and their internal team is enhanced, while transactions between buyers and their suppliers is similarly optimised. All the necessary tools to achieve successful collaboration are on one platform, easily accessible and effortless to implement.