By Cassandra Hopkins and Matt Rice, Managing Directors of Huntington Distribution Finance℠†
Manufacturers have a wealth of data at their fingertips, though finding meaning in it has been a historic challenge. Many organizations rely on spreadsheets to view inventory levels and dealership sales figures, but gaining insight from thousands of rows of numbers is no easy feat. This overabundance of raw data hinders rather than helps strategic decision making.
The real opportunity lies in converting that data into actionable insights. Investing in advanced data analytics and performance metrics doesn’t just help streamline manufacturing operations; it can aid in developing a comprehensive strategy that addresses inventory precision, market responsiveness, risk management, and competitive positioning.
Improve inventory age visibility
Manufacturers who struggle with inventory management are certainly not alone: In a benchmarking survey of manufacturers and distributors, 71.8% of surveyed respondents indicate their inventory management practices needed work‡. Many respondents cited high levels of committed inventory, lack of visibility, or reliance on manual processes.
The balancing act of forecasting is made easier with improved inventory age data. For example, analytics platforms can offer a detailed look at overall portfolio age by unit and by region. Seeing trends in inventory aging can allow manufacturers to identify dealerships struggling to move inventory or facing other inventory issues.
Real-time inventory tracking also provides much-needed visibility. In the same benchmarking survey, 76.1% of surveyed respondents rate their inventory visibility as good or excellent, meaning nearly a quarter feel their visibility is just fair or poor§. Improving visibility can help inform decisions about distribution and dealership health.
Align offerings with demand forecasting
Aligning product offerings with evolving customer preferences and seasonal demands is another area where detailed analytics and historic data can shine. Dissecting sales trends, including market share analysis and top performer metrics on dealership partners, can help in identifying customer behavior and preference shifts.
Here are just a few examples:
- When certain products are performing better than expected, manufacturers could use credit capacity metrics to identify which dealerships could handle additional product to satisfy the demand.
- Manufacturers can watch out for areas performing lower than others to identify potential issues, whether products aren’t fitting the audience, inventory is becoming obsolete more rapidly, or there are gaps in sales strategies.
- Increased sales in specific geographic regions could point to a demand spike and allow manufacturers to adjust production in real time to meet it.
- Tracking inventory age based on location could help identify areas where products aren’t in demand and need to be decreased.
Mitigate risk and provide support through environmental data
The increasing frequency and severity of weather events poses a substantial threat to both operations and supply chains. In 2023, the U.S. experienced a significant rise in weather-related disasters compared with the previous year: 28 weather disasters each caused losses exceeding $1 billion, compared with 18 similar events in 2022≠. Damage and disruption costs for companies unprepared for such events can be high.
Another benefit of adopting enhanced analytics platforms is the ability to incorporate FEMA and other external data into internal datasets. Integrating environmental disaster data and predictive models for incoming storms into existing data on retail or warehouse locations means manufacturers can better anticipate potential disruptions. Manufacturers can take swift action to provide support to affected dealerships by making them aware of the impending situation and prepare for the disaster.
On the other side, understanding the areas most impacted by weather events may benefit the surrounding communities. Manufacturers producing equipment often in high demand following a disaster, such as chainsaws or snow equipment, could identify opportunities to increase stock in affected areas to assist in recovery efforts.
Enhance decision making with industry data
Understanding how a manufacturer and their dealerships are performing in the market can be a game-changer. Some data analytics platforms, such as Huntington Distribution Finance’s Inventory Engine®, offer manufacturers the ability to compare their experiences with the overall industry. These metrics include average receivables trends, inventory weeks-on-hand, and volume change year-over-year. Developing benchmarks based on this industry data could help enhance decision making.
This opportunity is especially enticing given the lawn and garden market is projected to reach a revenue of $133 billion in 2024 and see an annual growth rate of 2.74% through 2028Ɫ. Dealers using this peer data, in addition to the enhanced inventory management and sales trends, could improve efforts to carve out a unique position in the market and find sustainable growth.
The transformative power of manufacturing data analytics
As the manufacturing sector continues to evolve, the adoption of advanced analytics to improve strategic decision-making will likely distinguish the leaders from the rest. Relying on in-depth performance, trends, and management metrics helps foster a culture that values data-driven insights over intuition.
The Huntington Distribution Finance team has decades of experience in the lawn and garden industry and can help dealers analyze their data. To learn more about how our experts can support you with financing solutions and enhanced data analytics, reach out to our team.
