Warehouse distributors are reacting to greater competition and economic volatility by holding more stock. Largely driven by the need to retain customers, the trend shows a re-evaluation of traditional inventory management systems – at least for now – in response to tariffs and supply chain delays.
The findings come from Phocas, a business intelligence and financial planning & analysis (BI and FP&A) platform for distributors in the middle-market, which recently released its 2026 Inventory Trends in Wholesale Distribution Report. Derived from a global survey of over 100 wholesale distributors, the report highlights current strategies being used by WDs to cope in a rapidly evolving trading environment.
While fundamentals like demand and lead time remain constant, the swift disruption of external market conditions requires a flexible approach to inventory management, the findings show. Inventory management is now a core strategic lever across the industry, identified as a tactical way to optimize cash flow, enhance supplier relationships and steer sustainable growth.
“Inventory management can be siloed in a distribution company. To do it well, the purchasing team needs to work closely with sales and finance so they can move with the market,” says Myles Glashier, CEO and co-founder of Phocas.
When asked what capabilities they want to enhance or add this year, wholesalers identified demand planning and more data and warehouse automation, alongside customer and product segmentation. These adjustments mirror the increasing complexity of the wholesale sector and requirement for data-driven decision-making.
“Demand planning is a core need for distributors, yet the industry faces an accuracy gap due to limited access to the right data. Distributors that can keep their planning up to date with current sales are lowering the cost of inventory and improving service levels,” adds Glashier.
AFTERMARKET COMPETITION
Drilling down to WDs serving the automotive aftermarket specifically, Glashier identifies increasing competition as a key challenge for vehicle parts distributors.
“As a result, many in the industry were early adopters of data-driven inventory management to retain customers,” he says. “A notable trend for the auto aftermarket parts industry is the growing practice of sharing data with suppliers. Distributors that do this are experiencing measurable performance improvements, including more accurate supplier lead-times, higher on-time delivery rates and reduced rework.”
Other key report insights include:
Competitive pressure is increasing supply chain complexity
- Distributors cite economic uncertainty as the most impactful challenge, with competition closely trailing.
- 70% are tasked with managing over 5,000 SKUs, engaging with over 50 suppliers.
- Boosting efficiency stands as the top priority.
Inventory strategies are adapting to economic uncertainty
- 54% want new demand planning techniques, while 45% are embedding more data-driven and automated warehouse solutions.
- A surge in customer and product segmentation is observed among 33%, while safety stock adjustments are reported by 31%.
Stock availability is being prioritized over cashflow
- 26% report 6-10% in deadstock, linked to over 90 days of stock held by 22%.
- Six-in-10 distributors believe sales are compromised when they have inadequate stock.
Demand planning is the No. 1 performance differentiator
- 14% have witnessed increased revenue; 34% have curtailed inventory costs.
- Enhanced service levels are recognized by 24%; better supplier terms by 12%.
Trusted data is resulting in better supplier performance
- Confidence in inventory data is high among 31%, with 87% acknowledging improved supplier management.
- Data sharing with suppliers improves lead time accuracy (9%) and fosters joint planning (8%).
Glashier emphasizes the importance of collaborative inventory management, stating, “Our latest report is designed to empower distributors by sharing insight from the industry on current conditions. With over 20 years of experience serving wholesale distributors, our commitment remains steadfast in providing clarity amidst industry changes. We aim to give distributors practical benchmarks, so they can compare their own operations and identify opportunities for improvement.”
Get the full 2026 Inventory Trends in Wholesale Distribution Report, available for immediate download here.