Wholesalers are brokers of merchandise; buying and then selling goods at a profit. The wholesale industry is a large and diverse sector of the US economy. The industry is highly fragmented, and consists of a few large companies and many smaller firms and is highly competitive with many firms distributing products of similar products. The company that can maximize its inventory turnovers and logistic systems will overcome competitive pricing pressures. Managers have to continually examine their processes and systems to ensure that their organizations are operating at peak efficiency. Timely financial information can provide answers to these questions.

Internal Management Reporting Systems

  • Has the company implemented a purchasing policy and procedures employing Min/Max purchasing and safety stocks?
  • Is the company’s inventory properly valued to include those costs incurred to bring products to sell and to determine sales prices?
  • Has management performed a cost-benefit analysis comparing lost purchasing discounts to borrowing costs?

Product and Product Line Profitability Analyses

  • Does you company calculate profit margins by product class, product, customer and sales territory?
  • Has your company analyzed sales by product to determine the top 20% of products that provide 80% of the firm’s sales and gross profits?
  • Has management calculated shipping costs by zones to maximize profits?

Inventory Management and Control Systems

  • Does management calculate inventory turnover by product class and products to reduce inventory carrying costs and maximize cash flows?
  • Does the warehousing storage system reduce time to complete order fulfillment?
  • Has the company implemented cycle counts to reduce inventory losses and improve perpetual reporting?

Financial Reporting

  • Does the company’s reporting system provide management with current and timely financial data including product class and product financial statements?