As MDM Publisher Tom Gale recently wrote, more distribution companies are shifting what was once a traditional internal operational function — inventory management — into a more customer-focused value proposition leveraging technology and analytics.
“The data available from inventory management platforms can also present a long-term strategic opportunity in the form of improved demand planning, exposure of costly trends and even visibility into competitors’ share of customer spend,” writes Elizabeth Galentine, MDM editor, in Beyond the Basics of Inventory Management.
Part of an effective inventory management strategy, product substitutions offer opportunities to boost margin and customer service. Most distributors offer product substitutions — trading one brand for another, for example — when what the customer orders is out of stock. They may also offer a substitution if a less expensive product with the same functionality is available.
But a smart item substitution strategy goes beyond that. It is proactive, not reactive. Plus, it’s customer-focused. Benefits include:
Greater customer satisfaction. Don’t make customers wait for back-ordered items.
Improved inventory management. Execute a substitution strategy that drives more inventory turns and increases procurement efficiencies. Reducing back orders reduces the drain and expense back-order processing has on your operations.
Preserved margins. With the right tools (such as ENAVATE’s Product Substitution Management App), distributors can preserve the price of an original item and apply it to the substituted item, or choose not to substitute an item if margin would fall.
Get more flexibility in how you manage item substitutions in Microsoft Dynamics 365 with our Product Substitution Management App, available in Microsoft AppSource.
About the Author
Cameron has held various leadership roles within the wholesale distribution industry for over 20 years. For the past decade, he has worked in the Microsoft Dynamics space in both consulting and software development. Combining his distribution expertise with his knowledge of Microsoft Dynamics technology, his ability to build best-in-class solutions that enable digital transformation for distribution companies is unprecedented. Cameron resides in Elizabeth, Colorado and if he is not at his kids' sporting events, he is likely researching his family genealogy or studying history.