Companies overstock as sales decline
Lower sales during May have created large stockpiles for wholesalers. The Commerce Department recently announced that sales at the wholesale level declined by 0.8% from April. Despite this, inventory levels grew by 0.3%.
Delays in reporting information through the distribution network have caused many companies to miss changing market trends. Economic growth at the beginning of the year was stalled because companies restocked slowly. However, now that firms are restocking at a faster rate, growth has flattened, according to The Washington Post.
More accurate monitoring can help companies improve their transportation management practices to keep inventory in line with customer demand. Tracking inventory as it moves through warehouses allows managers to adjust supply purchases based on current inventory levels. With better tracking, companies can predict customer demand and adjust their purchases accordingly.
High unemployment and a lack of growth is likely to reduce consumer spending in the coming months. Economists predict a disappointing second quarter for the year, which will likely reduce demand for products. Having an accurate assessment of inventory can help companies improve their forecasting and adjust their inventory levels for the coming months.
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File Under: Distribution & Warehousing