Business planning

How digital supply chains can solve wholesale distribution inefficiencies

Wholesale distributors face a number of internal and external challenges. Their most pressing priority is the need to close the information gap between their business operations and their customers. In today’s digital era, customer demands shift rapidly, carry enormous influence, and need responsive, relevant attention.

To keep up with their customers’ ever-changing wants and needs, wholesale distributors have to manage diverse and complex product inventories – as well as fluctuating supply chains. As a result, savvy wholesale distributors are embracing digital transformation to empower their operations with end-to-end visibility, data intelligence, agility, and speed.

Out with the old, in with the new

Legacy IT infrastructure, such as financial ERP systems, are simply not smart enough to give wholesale distribution businesses sustainable competitive advantages. And yet, according to IDC research, at least 40% of companies worldwide are stuck in an ERP technical debt with heavily customised and functionally specific systems.

If your business still relies on archaic technologies, chances are it is struggling to deliver fast, efficient, and customer-centric distribution – non-negotiable KPIs for enterprises striving for success in the global digital economy. If, for example, your business consistently suffers from an imbalance in supply and demand, resulting in too much unwanted stock or not enough goods to satisfy customers, then it is high time to invest in cloud-enabled intelligent software.

The price of inefficiency

The price of inefficiency is high: excess, unwanted products cut into profit and revenue, and dissatisfied customers can reduce a brand’s reputational value with just a few clicks. To build and protect your business’s market position, you need to improve your customer service performance and deliver a superior value chain experience. To do that, you need to identify and fix the inefficiencies that currently undermine your growth potential. And yes, to do that, you need to digitally transform your operations.

Digital transformation can help your business become more efficient and, as a result, generate increased revenue. In fact, IDC research shows that 32% of distributors see new tech as one of the most important change drivers in their industry. These forward-thinking wholesale enterprises are investing in a new generation of intelligent ERP (iERP) systems to help them manage their costs, boost their profits, engage with customers, and gain real-time visibility into their end-to-end operations.

Always-on visibility

Today’s global supply chain is an interconnected web that includes an expansive network of production facilities, warehouses, and transportation hubs. To meet customer demand on time, every time, wholesale distributors cannot afford to lose track of their goods at any point. The problem with old ERP systems is that they are unable to pinpoint the location of goods along the supply chain with accuracy or in real-time. Nor are they able to provide a comprehensive product history as and when needed.

An iERP system that is adapted to your business model can maintain always-on visibility across your supply chain. Being able to track and trace your processes, suppliers, and customers at all times is crucial to ensuring that delivery schedules are met in the most efficient – and sustainable – manner possible.

Sustainability matters

Distributors worldwide are influenced by consumers, regulations, and new tech to improve their environmental impact and stay relevant. Smart technologies such as machine learning, AI, and automation are key components of next-generation ERP.

This advanced IT architecture enables cross-functional collaboration in support of wholesale distributors’ top sustainability efforts: product recycling and reverse logistics, and achieving low to no emissions within internal logistics and internal supply chain operations.

Supply chain priorities – where does the industry stand?

The wholesale distribution industry is responding to market demands for greater efficiency. More and more businesses are making selective investments in their supply chains over the next 12 months to significantly and steadily improve overall performance over the next two to three years.

The IDC research  points to four specific investment areas that are set to transform wholesale distribution and indicates just how much attention they are currently getting from the industry:

  1. Cost reduction and waste elimination – 38%
  2. IT architectural upgrade to modernise operations – 32%
  3. Customer-centricity to improve service performance – 31%
  4. Operational visibility / traceability / predictability – 25%

There is a definite shift towards digitally-enabled, smart, agile, efficient, and always-on distribution processes and practices. Overall, 64% of distributors are choosing operational excellence as their main digital transformation objective.

There is no doubt that the case for harnessing the power of intelligent software, such as an iERP system, is becoming stronger as more and more businesses invest in relevant IT upgrades. The repercussions of falling behind are incredibly costly and can cause irreparable damage. Fortunately, the tide is only just beginning to gather momentum. There is still time to transform your operations and embrace all the benefits of digitised distribution.