Technology & Innovation

Three ways distributors can achieve digital transformation

Wholesale distribution is fundamentally transforming. Digital disruption has changed how distributors build and maintain customer relationships. Today's...

Wholesale distribution is fundamentally transforming.

Digital disruption has changed how distributors build and maintain customer relationships. Today’s empowered customer base can purchase goods across channels, and can demand personalization, flexible pricing, and very little delay. This means distributors must find ways to maximize their supply chains to deliver exceptional customer experiences.

Adding to that, challenges from the new data economy have made some traditional distribution channels obsolete. Distributors today face more challenging and complex fulfillment requirements, such as the need to manage their traditional B2B business together with an eCommerce website.

Survival of the fittest is appropriate here. Digital disruptors are reshaping supply chains and changing business models across the board. This means wholesale distributors must rethink their own processes and models, making use of data to maintain their market share and beat the competition.

Digital disruption creates an opportunity for distributors to operate more efficiently and reduce costs. There are three approaches distributors can consider to evolve, become more productive and efficient, and build stronger experiences for customers.

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Identify value add opportunities

Wholesale distributors may already have been providing value-added services. Although distributors might not recognize servitization as a term, it’s likely that many have already incorporated simple value-added services—such as product selection, picking, packing, and shipping.

There are more advanced services that distributors should look at which could increase profitability and differentiate themselves from the competition, such as:

  • Product installation and component assembly
  • Product customization
  • Field service, maintenance, and quality inspection
  • In-house repair
  • Just-in-time delivery
  • Consulting
  • Training and education

These new services are made possible through technology. For example, you can offer virtual training through a connected smartphone, tablet, or laptop. Embedded sensors in products can notify your team of issues and customers of possible downtime. And through 3D printing, you can offer tightly customized products created at rapid speed.

To take advantage of servitization, your business must be data-driven to define and create new services. Look for business management solutions that can manage, date, and deliver data as a view of all actions that are happening within the organization. This enables you to identify where new service opportunities exist.

Become a real-time distributor

Today’s wholesale distributor is expected to think and act in real-time to keep up with customer expectations. In the past, they may have relied on historical data to base their forecasts on, but this doesn’t provide the accuracy and deep insight needed to meet current productivity and efficiency demands.

Digital transformation makes it possible for greater operational flexibility and insight into customer need. You can be online 24/7, offering customers a self-service experience where they can place orders, update quantities, and schedule at their own convenience. Real-time analytics could be crucial for a wholesale distributor with a lot of moving parts, as it’s an essential tool to handle logistics in this all-hours agile manner.

Automated alerts could inform actions based on changes in demand or other factors. With easy-to-use data, in conjunction with analytical capabilities, distributors could better plan and forecast demand (improving customer service and reducing costs) as well as inform changes in workflows, such as combining shipments. In addition, the Internet of Things (IoT) allows distributors to use connected devices, products, and tools equipped with sensors that can talk to each other, collect, and store data. They can partner with manufacturers and retailers to access data in real time. To make the best use of data to drive informed and timely decisions, wholesale distributors must replace legacy siloed systems which could prevent information and insight from being used across the business. A robust business management solution could be the solution.

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Innovate with inventory

Connectivity and the ability to use data in new ways has ushered in a new era of supply chain visibility. The digital world allows distributors to dynamically connect with their partners. With in-transit visibility, they can track shipments as they move, with any delay triggering an immediate alert.

Distributors can also use analytics to analyze historic sale patterns to predict with accuracy patterns to help plan when they need to build up inventory or scale down and run on less inventory, depending on demand. This allows businesses to make commitments or allocations based on supply since they know where and when inventory will be available. IoT technologies and the ability to integrate in real time with business management solutions transforms how inventory can be tracked and managed, and allows for automation. Business management solutions can track items in real time, usually through RFID tags or barcodes that can be scanned or identified. This provides visibility into information like inventory levels, expiration dates, and location, which can support demand planning and forecast management.

With advances in IoT, information such as inventory temperature, weather, and GPS location could answer questions such as where exactly a product or material is located, which areas are causing delays in the supply chain, and whether certain processes are working better than others. Technology can also support distributors in reducing costs through transformative processes such as 3D printing. This could allow distributors to carry an unlimited number of customizable products, whether printed in-house or through a 3D printer provided to the customer or buyer.

What distributors should do next

For successful digital transformation, distributors must take a multi-pronged approach.

Assess digital maturity and identify the gaps

Distributors must find ways to plot their organizational maturity, which will provide guidance on where they need to elevate their digital capabilities. This will mean an analysis on how you can drive a digital culture, how to organize and resource to do this, and how to invest and take advantage of customer-driven insight to steer where they need to go.

Build the relationship between business and IT to focus on customer outcomes

Successful business digital transformation requires distributors to achieve improvement in customer experience across all departments. Technology isn’t one size fits all—each business needs to find their own way to make sure their digital transformation results in positive customer outcomes—the key metric that can help light the way.

Plot a two-path roadmap—quick wins and platform investments

A digital transformation strategy could have two roadmaps—one that follows a path of quick wins and another that focuses on the platform investments needed. Quick wins show improvements that are visible to the business, benefits, and can be delivered quickly.

Invest in core systems with a clear ROI

Digital transformation will come with significant expenses, so it’s necessary to make sure that investments made in hardware and software show return on investment when it comes to the cost savings made in productivity and efficiency benefits.