I have met over 6000 distributors and scores of executives and managers of distribution-led companies selling things as diverse as soap, shampoo, diapers, hair dyes, commercial vehicle parts, lubricants for cars and two-wheelers, hand tools (screw-drivers, files, etc.), textile, shoes, paper, edible oil, rice, steel and what have you. Though every industry believes very strongly that they are “different” and their challenges are unique, when I look at back at my discussions with them, I find a lot of common themes.One of the biggest bugbears of these people is the problem of 'slow movers' and how they all have tried with this problem all through their working lives, so much so that eventually all these slow movers are phased out in what is politely called 'strategic product portfolio rationalisation.' If you are even remotely associated with the distribution environment, you would know the perennial problem and I would like to tickle your thinking for a moment.Let me pose a riddle to you: A company deals with two products A and B. A sells about 50 units a week, and B sells about 250 units a week. Which one is a slow mover, and which one is a fast mover? Think for a moment and fix your answer before you read on further. I get a response from some people that A is a slow mover and B is a fast mover.Now let me tell you that based on the information that I have given you; it is not possible to find out which one is a slow mover and which one is a fast mover! The missing information is this: The stocks of A are about 50 units, and that of B are 1000 units. Now tell me, which one is a slow mover?Obviously B!Why does the picture change? Does it hurt that A is selling 'only' 50 units a week? (Maybe the market is only that big) Would you kill product B because it is a slow mover? Let us admit, for any distributor or company, the sales of 50 units a week are not worrying (as long as the gross contribution (or Throughput, as I call it) is positive. What hurts them is that every day they see the large stocks (or MIS reports, depending on whether you are the distributor or the lucky company executive sitting in the cushy office) of B. So, how do you convert the slow mover to a fast mover?  The so-called slow movers were self-created as inventory supply was more than the rate of sales for that product. If we create slow movers, we can prevent it too. Everything can be a fast mover if the sales to stock ratio (also known as inventory turns) are high for each of the product. The question now is why this simple logic is not in place in most companies. It is so because inventory movement is not based on ‘pull’ but on 'push’ mode. If inventory is on 'push’ mode, we will end up with some SKUs with very high stocks (as compared to sales rate) and, while in others it will be too low. We can achieve the utopia of all SKUs having a very high sales-to-stock ratio, only when we have a pull system or, in other words, a rapid replenishment system capable of reacting to fluctuating demand patterns in very short horizons. The system should have an in-built auto-locking mechanism, which adjusts or stops inventory supply when demand drops for an SKU. The Theory of Constraints and replenishment solution helps align the rate of flow of inventory in entire supply chain with rate of actual demand at the last point of sales.Now I can hear, “This is all theory”! I agree this is a theory and a very sound one. By the way, do you know that for a hypothesis to be called a theory, it has to clear the specially designed tests of failure repeatedly? This means that nothing is actually more practical than a good theory. I have digressed to a different topic. But let me re-verbalise the reservation based on my experience of interaction with many sales and distribution managers. <ol><li>We cannot hope to implement a pull system because our sales will take a hit</li><li>Is it applicable in my industry?</li><li>Has it been done anywhere in India? </li></ol>The first one opens up discussions on another paradigm shift. The MORE one pushes, the LESS one sells. You cannot believe this new paradigm? What if I prove it to you?I need to describe the new paradigm in more detail and also deal with the other two reservations. I would suggest you read the article 100% availability with lower inventory to understand the full solution.

Key Takeaways

'Slow movers' are phased out in the so-called 'strategic product portfolio rationalisation'. But are they really slow movers? Find out how these 'slow movers' can be converted into 'fast movers'.

Who creates slow movers?

I have met over 6000 distributors and scores of executives and managers of distribution-led companies selling things as diverse as soap, shampoo, diapers, hair dyes, commercial vehicle parts, lubricants for cars and two-wheelers, hand tools (screw-drivers, files, etc.), textile, shoes, paper, edible oil, rice, steel and what have you.  Though every industry believes very strongly that they are “different” and their challenges are unique, when I look at back at my discussions with them, I find a lot of common themes. One of the biggest bugbears of these people is the problem of 'slow movers' and how they all have tried with this problem all through their working lives, so much so that eventually all these slow movers are phased out in what is politely called 'strategic product portfolio rationalisation.'  If you are even remotely associated with the distribution environment, you would know the perennial problem and I would like to tickle your thinking for a moment. Let me pose a riddle to you: A company deals with two products A and B. A sells about 50 units a week, and B sells about 250 units a week.  Which one is a slow mover, and which one is a fast mover? Think for a moment and fix your answer before you read on further.  I get a response from some people that A is a slow mover and B is a fast mover. Now let me tell you that based on the information that I have given you; it is not possible to find out which one is a slow mover and which one is a fast mover!  The missing information is this: The stocks of A are about 50 units, and that of B are 1000 units.  Now tell me, which one is a slow mover? Obviously B! Why does the picture change? Does it hurt that A is selling 'only' 50 units a week? (Maybe the market is only that big) Would you kill product B because it is a slow mover?  Let us admit, for any distributor or company, the sales of 50 units a week are not worrying (as long as the gross contribution (or Throughput, as I call it) is positive. What hurts them is that every day they see the large stocks (or MIS reports, depending on whether you are the distributor or the lucky company executive sitting in the cushy office) of B.  So, how do you convert the slow mover to a fast mover?  The so-called slow movers were self-created as inventory supply was more than the rate of sales for that product. If we create slow movers, we can prevent it too. Everything can be a fast mover if the sales to stock ratio (also known as inventory turns) are high for each of the product.  The question now is why this simple logic is not in place in most companies. It is so because inventory movement is not based on ‘pull’ but on 'push’ mode. If inventory is on 'push’ mode, we will end up with some SKUs with very high stocks (as compared to sales rate) and, while in others it will be too low.  We can achieve the utopia of all SKUs having a very high sales-to-stock ratio, only when we have a pull system or, in other words, a rapid replenishment system capable of reacting to fluctuating demand patterns in very short horizons. The system should have an in-built auto-locking mechanism, which adjusts or stops inventory supply when demand drops for an SKU. The Theory of Constraints and replenishment solution helps align the rate of flow of inventory in entire supply chain with rate of actual demand at the last point of sales. Now I can hear, “This is all theory”!  I agree this is a theory and a very sound one. By the way, do you know that for a hypothesis to be called a theory, it has to clear the specially designed tests of failure repeatedly? This means that nothing is actually more practical than a good theory.  I have digressed to a different topic. But let me re-verbalise the reservation based on my experience of interaction with many sales and distribution managers. <ol><li>We cannot hope to implement a pull system because our sales will take a hit</li><li>Is it applicable in my industry?</li><li>Has it been done anywhere in India?  </li></ol>The first one opens up discussions on another paradigm shift. The MORE one pushes, the LESS one sells. You cannot believe this new paradigm? What if I prove it to you? I need to describe the new paradigm in more detail and also deal with the other two reservations. I would suggest you read the article <a target="_blank" rel="noopener noreferrer" href="https://www.vectorconsulting.in/en/research-and-publication/articles/100-availability-with-less-than-half-the-inventory/">100% availability with lower inventory to understand the full solution. </a>

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Explore how inventory mismanagement creates slow movers and discover strategies to convert them into fast movers through effective pull systems and replenishment.