I still remember my first experience overseeing a physical inventory count. At the time, I was an accounting consultant with one of the Big Four firms, assigned to help a client streamline their inventory management process. The client was one of the large brands in healthcare consumer goods wholesale distribution, dealing with vast amounts of stock across multiple locations. It was a chaotic, all-hands-on-deck process that disrupted our entire operation for days. We shut down the warehouse, halted order fulfillment, and scrambled to tally thousands of products manually. The process was exhausting, riddled with errors, and by the end, I found myself questioning: Is there a better way to do this?
The answer, of course, was yes.
Over the years, I’ve learned that physical inventory counts don’t have to be painful. In fact, they can be streamlined into a smooth, efficient process that provides valuable insights into a business’s stock levels, financials, and operational efficiencies. This is particularly crucial for wholesale distributors with revenues between $20 million and $80 million, where inefficiencies in inventory management can directly impact cash flow and profitability.
This blog explores best practices for wholesale distribution companies to optimize inventory counts with NetSuite ERP, the leading cloud-based solution for inventory management.
Table of Content:
1. Why Physical Inventory Counts Matter for Wholesale Distributors
2. Common Challenges in Physical Inventory Counts
3. How Cycle Counting Revolutionized My Approach
4. Best Practices for a Successful Physical Inventory Count with NetSuite ERP
5. Why NetSuite ERP is the Best Inventory Solution for Wholesale Distributors
6. Final Thoughts
For wholesale distribution businesses, inventory holding costs can account for 20-30% of total assets. This makes effective inventory control a strategic priority.
Accurate inventory counts allow companies to:
Forecast demand and avoid stockouts or overstock situations.
Monitor theft and shrinkage.
Improve financial reporting and budgeting.
Increase operational efficiency and customer satisfaction.
Without a reliable system like NetSuite ERP, errors in inventory records can lead to inaccurate financial reports, compliance issues, and lost revenue.
Wholesale distributors often struggle with:
Manual Counting Errors – Relying on paper sheets and count cards leads to inevitable human mistakes.
Labor-Intensive Process – The time and manpower required disrupt normal business operations.
Inventory Freezes – Many companies must halt operations to complete the count, leading to lost productivity and sales.
Outdated Data – If you only count once a year, discrepancies build up, making reconciliation a nightmare.
The good news? There’s a solution: cycle counting with NetSuite ERP.
During my time working with clients at the Big Four, I realized that instead of waiting until the end of the year to conduct a full-scale inventory count, cycle counting was a far better approach. This method involves counting smaller sections of inventory on a regular basis—daily, weekly, or monthly—depending on business needs.
Wholesale distributors that implement cycle counting within NetSuite ERP gain:
Wholesale distribution companies can maximize inventory accuracy by following these best practices within NetSuite:
Prepare in Advance – Ensure all inventory transactions are up to date before the count begins.
Use Technology – Barcode scanners, RFID tags, and NetSuite’s inventory management system dramatically reduce errors.
Segment Inventory – Categorize items by volume, value, or movement frequency to prioritize high-risk areas.
Assign Dedicated Teams – Designate experienced employees to conduct counts, rather than temporary staff unfamiliar with the inventory.
Count During Low-Activity Periods – Conduct counts before shifts start or during slower business hours.
Implement Smart Count Systems – Platforms like NetSuite’s Smart Count automate cycle counts and provide real-time data.
Investigate Discrepancies Immediately – Address errors as they arise rather than waiting until the end of the count.
Document the Process – Keep detailed records of counts, errors, and resolutions for future reference.
NetSuite ERP provides an end-to-end inventory management solution tailored to wholesale distributors. Its benefits include:
Real-time visibility into stock levels across multiple warehouses.
Automated cycle counting to reduce manual errors and optimize stock control.
Advanced forecasting tools to ensure the right amount of inventory is always on hand.
Seamless order fulfillment integration to improve customer satisfaction.
Scalability to support businesses as they grow beyond $80 million in revenue.
Mastering inventory counts is not just about improving warehouse efficiency—it’s about maximizing profitability for wholesale distributors. By shifting from traditional, disruptive year-end counts to a streamlined, technology-driven cycle counting process with NetSuite ERP, companies can dramatically improve accuracy, reduce labor costs, and ensure they always have the right inventory on hand.
Looking back at my early struggles, I wish I had known then what I know now. But those lessons paved the way for a better system—one that I now implement across businesses I work with. If your inventory process feels like a never-ending headache, maybe it’s time for a change.
Are you a wholesale distributor struggling with inventory management? Let’s discuss how NetSuite ERP can help your business scale efficiently and improve profitability.