1. Seven Fatal Sins: Why FMCG Distributors Are Overstocked
Make no mistake Manufacturer, YOU put the stock there, oh yes you did! Distributors don't buy
stock for a laugh and a giggle. Excess stock blocks up their warehouses and locks up their
CASH.
1. MONTH, QUARTER AND YEAR-END PUSH. "Targets have to be met so push as
much stock as possible onto the Distributors."
2. FAILED LAUNCHES. Unrealistic Manufacturer sales objectives leading to slow
moving goods.
3. OLD LABEL STOCK. Perfectly good stock but the pack with the new artwork is being
sold already and nobody wants this.
4. OLD AND EXPIRED PROMOTIONS. Funding support has ended so what do we do
with all these left over promo packs?
5. RETURNS FROM CUSTOMERS. Still arguing about who is to pay for these returns?
6. MANUFACTURER forecasting errors. Nobody wants to lose face at Manufacturer
HQ so the stock sits and gathers dust until it expires.
7. DAMAGED AND EXPIRED. Damages happen, get them written off AND destroyed
and get over it. You can avoid expired goods - see above!
You might think your Distributors have a healthy 21 days of cover but in reality they are
operating with a much lower level of saleable stock. The rest sits in their books and in your stock
cover numbers but it contributes nothing to sales. In fact, it negatively affects sales as stock that
is in demand is available at too low levels to meet customer requirements.