VTH annual conference 2023: inventory optimisation on the programme.

The conference.

"Let's actively shape the future as an industry", VTH chairman Mario Ernst opened the annual conference at the Mercure Hotel MOA Berlin. The specialist programme gave the wholesale for industrial supplies a compass for challenging times: digital services, sustainability and the EU Green Deal, new volume growth and a market and future analysis for technical trade.

What the warehouse costs.

Felix Kogler presented the industry with its own figures: taking the warehouse volume of €615m from the VTH annual report and a warehouse cost rate of 20% of the stock value, VTH members together pay around €14,000 in warehouse costs per hour. With 10% avoidable excess stock, €1,400 of that per hour is too much. Behind this is a finding from the Abels & Kemner inventory management analysis 2021: wholesalers invest an additional 19 to 30% of their average inventory value in holding costs annually.

To put €1,400 per hour into context: over the year, the equivalent of around 336 additional employees for the industry. What the excess stock costs in your company is shown by the working capital calculator.

The strategies.

The path to better cash flow ran in the talk over three building blocks: first, better demand forecasts, from historical analogy through moving averages and exponential smoothing to machine learning. Second, reporting with the right KPIs: stock coverage, service level, stock health, forecast accuracy, plus the fast-mover/slow-mover analysis. Third, differentiated order cycles per article class instead of one ordering rule for everything. And for implementation, an honest statement: depending on the article base and requirements, that ranges from Excel formulas through Python to inventory-optimisation software. The three biggest mistakes in it: the wrong strategy, a lack of agility and a lack of buy-in across all levels.