DUMALUX US

The 3 LED Inventory Challenges Distributors Need to Know About

Did you know that the LED inventory challenges of importing are more complex than what you may already know? Just to give an example:

Let´s say you install or sell LED lights, and sometimes you face the dreaded “back order”.

The pressures of “not” delivering, or explaining to your customer that their lights will not be available for 2 weeks or longer!

Then the supplier tells you, the container has finally arrived, but the snow storm delayed off loading, then getting the shipment out was a nightmare, ahhhh!  Where does it end?!?

So let’s walk through what your suppliers must do in order to get their products from their overseas plant, into your hands.

1. The Market Place

The process starts with an obvious, what does the market need and desire?  Historical trends give us this information, but the issue is, products evolve with time.

So even though we know a 2’x 4’ troffer is a normal lay-in/build out product, the LED Flat Panel has evolved into its replacement.

If a manufacture invests in troffers, at the same moment LED flat panels come into fashion, they could find themselves in a pickle, and stuck with products no one wants anymore.

So planning is the first step to being a successful supplier.  Not ordering too much, but having enough stock for your customers, this leads to problem number two.

2. Out of Stock

LED inventory challenges - Increase Your LED Sales - DUMALUX

Sometimes suppliers sell out of products before the next shipment arrives.  How does your supplier counter this issue?

Contractors are then in the situation to push back deadlines that their customers have firm in their minds.

Often, equipment like lifts are impossible to book for days, or even weeks in advance!  So timing of delivery is crucial to coordinate.

A common problem suppliers have, is that inventory can be unknowingly sold multiple times.  How does this happen?

Let’s say a supplier has 60 LED Parking Area Lights left before the next shipment arrives in three weeks.

Sales person A commits to sell 20 pieces, sales person B sells 30 pieces (often if not the same day, but the same hour), while sales person C sells 40 pieces (while all of these orders were placed based on an accurate inventory report of 60 units in stock).

Obviously, not all the orders can be filled, the inventory simply does not add up to the total quantity sold.

Now the supplier has 2 factors that will determine which contractor will get the remaining inventory, and which order will be back ordered.

  • The relationship with their customer
  • Which sales are profitable (different customers can be on different pricing schedules)

So where does this leave the guy holding the bag?  He’s left with an irritated customer.

3. A Slow Boat from China

When an order is placed, it takes at least 30 days for the production run to make and assemble the products.

Then, even if the order is immediately shipped to a port for export, the products still have a 35 day ocean crossing, and a transit time before arriving to the supplier’s warehouse.

This requires a minimum of 65 days, from the time an order is placed to the factory, and the time of arrival to your supplier.

How Can LED Inventory Challenges be Minimized?

LED lighting manufactures can make their supply chain more resilient from everyday disruptions by having a contingency “playbook” or plan in place that lists every knowable risk.

Here are four main aspects of that plan.

1. Identify The Risk

At the very least, suggests Mateo Duque, logistics and production director of DUMALUX LLC, understand your customers needs. When simply asked, contractors will reveal their deadlines and customers expectations.

Coordinating to insure these answers are clear will help avoid tough decisions later.

Communication is key, and will prevent unnecessary stress, while most businesses don’t even ask this question.”

In a recent case, of three businesses with conflicting inventory (order) overlap, when asked, one did not have a hard date the products needed to arrive.

This means the decision to back order that one customer’s delivery prevented unnecessary alarm with the other two contractors.  Communication makes all the difference in the world.

LED inventory challenges - Increase Your LED Sales - DUMALUX

2. Plan Your Risk Response

You don’t know when these everyday risks will happen, but you do know that they will happen, so it’s important to be ready.

Duque suggests thinking about the most likely issues your business will encounter, and ensure you have a plan in place.

These should include a back up supplier that can lend a hand when inventory conflicts arise.

Having strategic partners that also carry the same products, from the same overseas factories allows manufactures to have the same products, with often the same specifications, while possibly made under a different trademark, act as backup suppliers.

3. Mitigate The Risk

You may focus on the effects only once an issue arises, but there are things you can be doing now to mitigate risks, says Duque.

When putting together your contingency plan, design strategies with countermeasures that lessen costly disruptions, like adding more labor if you have complex products and processes.

Companies that use improved visibility can detect potential disruptions in the supply chain before they happen and find ways to avoid those potentially devastating incidents.

For example, in the case of extreme weather, find alternate routes ahead of time and create protocols that keep transport operatives able to change routes quickly, should a short-term recovery plan be needed.

4. Expand Your Risk Response Team

Businesses that don’t have the expertise in house to deal with these ongoing risks may want to collaborate with a third-party logistics provider (3PL), such as UPS or FedEx, who can set up contingency plans to keep your supply chain running smoothly.

For example, an experienced 3PL will be able to offer redundancy and flexibility through the use of multi-client facilities from which they can store a portion of your inventory and dispatch your products when you aren’t able to do so.

The vast networks of 3PLs can also help provide resilience as disruptions go from risk to reality.

A major supply disruption only takes a few hours to manifest, but potentially takes weeks to recover from, or at a minimum shake your customer’s confidence, so it’s worth the time spent to make sure you have the right plans in place to handle those risks and keep business running smoothly.

The bottom line is, planning and communication keeps your customers content and your supply chain running smoothly.

LED inventory challenges - Increase Your LED Sales - DUMALUX

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