Supply Chain Management Basics for Distributors

A distributor absorbs a late factory and a buyer who moved their ad a week. That is the job. Supply-chain design is how you decide which variability you will hold as inventory, which you will hold as time, and which you will refuse. Holding all of it as heroics is how Saturday becomes a department.

Map the critical path for the 50 A items: supplier, inbound mode, receive, slot, pick, outbound mode, customer dock. The longest reliable lead time on that path is the promise you can sell. Anything shorter is a special you will miss.

Cash is a supply-chain buffer too. CCC = DIO + DSO − DPO. Extra DIO is a buffer you paid for. Extra DSO is a buffer you funded for the customer. Name them.

Sales, purchasing, and the warehouse cannot run on three forecasts. A weekly 45-minute exception meeting: A-item stockouts, inbound slips, promotions that landed on the calendar, and doors that just got a credit hold. No slides. A list. Decisions on the list.

Promotions without an inbound date are rumors. If marketing prints a flyer for an item that is on the water, you just advertised a short. Freeze the flyer until receiving has a day.

The SBA managing-finances reminder applies: a promotion that spikes DIO and DSO at the same time is a cash event. Invite credit to the meeting in peak season.

Single-source A items are a going-concern risk. You do not need two factories on every C item. You need a second qualified source — or a documented substitute — on the items whose stockout cancels a Thursday. Qualify them before the fire, including COI, W-9, and a test PO.

Supplier concentration: if one factory is 30% of GP$, map the 20 SKUs that would hurt and the days of cover you actually have. A second source at a worse price is insurance. Price the insurance as safety stock plus the dual-source premium, not as a betrayal of the incumbent.

Transport backup is the same idea. One LTL carrier on a lane will fail on a Thursday. A routing guide with a second and a rule for when to use them is cheaper than a customer who found a new primary.

Published lead time should be the 80th percentile of the last six months, not the factory's brochure. If the brochure says 10 days and you live at 16, print 16. Hunters will complain. Fill will rise.

Special-order lead times need a prefix: 'not stocked, 12–18 days, no cancel after 48 hours.' Saying 'about two weeks' is how you get a cancel on day 11 and a case you will own until Christmas.

Inbound visibility is a milestone list: PO ack, ship notice, arrival, receive. 'The container is delayed' is not a milestone. A date and a next check-in is. CS should be able to quote that date without walking to purchasing.

A food ingredient with no substitute, 11 independent bakeries on a Tuesday route, and a container that sat an extra 14 days because the ISF was late. You expedited air on 20% of the volume at $4.80 a lb and still shorted the rest. Three bakeries added a second supplier that month. Two of them did not come back to primary.

The cheap part of that story was the broker fee you skipped. The expensive part was the dual-source you had not qualified. Afterward they kept 3 weeks of cover and a domestic backup at +18% for the A SKU only. That +18% is cheaper than 11 conversations about trust.

Census foreign-trade / AES and your broker's ISF calendar are part of domestic fill rate if you import. Treat them as warehouse inputs, not as 'international stuff.'

Inbound freight, outbound freight, warehouse labor, occupancy, and claims — five lines. If outbound is 4.8% of sales and climbing, do not start a packaging-sustainability project. Start a mode and accessorial project. If warehouse labor is 3.1% and accuracy is 96%, start slotting and scanning. If claims are 0.9%, start pack and carrier claims.

Do not average them into 'logistics %' and stop. The average hides the line you can move this quarter.

Review monthly with one change committed. Twelve small committed changes beat an annual offsite that produces a poster. The poster will not receive the container.

It means a second source on 15 SKUs, a second carrier on 5 lanes, a cycle count that is real, and a credit hold that can fire without the owner. It does not mean a control-tower subscription or a war-game weekend.

Write a one-page disruption card: who calls the buyer, who calls the carrier, who can approve air, who can substitute. Tape it. The first late container after you write it will go better than the last one.

Insurance and COIs belong on the same card. A building you cannot enter after a sprinkler event is a supply-chain event. Know the broker and the limit before 2 a.m.

Once a month, lock a 90-day view: expected units on the top 100 SKUs, known promotions, known inbound, and the cash the buy will consume. That is the planning meeting. If sales will not put promotions on the calendar, purchasing should not buy the story. If purchasing will not share the inbound slip, sales should not promise the door.

Capacity is part of the plan. A 90-day unit view that the warehouse cannot pick in the last two weeks of the quarter is a fantasy. Put lines-per-day capacity next to the unit plan. Overtime is a decision, not a surprise.

The Census AWTS ratios are a once-a-year sanity check, not a monthly ritual. Your monthly ritual is the exception list. If the meeting cannot name three decisions, it was a reading group.

A door on credit hold is demand you should not buy for. A supplier on a quality hold is supply you should not promise. Both holds should appear on the same A-item view so a buyer does not replenish a dead door and a hunter does not sell a quarantined lot.

New-logo onboarding is a supply-chain event. A starter set of 12 SKUs needs on-hand or a dated inbound, not a hope. Sales that launch a door on items that are two weeks out will dual-source you by week three. Gate the first-ship date on inventory, not on the hunter's quota Friday.

Returns to vendors close the loop. If purchasing never hears that lot 24A03 came back wet, they will buy it again. Feed RMA reasons into the supplier review the same month, not at renewal. A 4% defect rate that you ate quietly is a price you already paid.