Moving products between manufacturers and end users seem straightforward in theory but it is complicated in practice.
Industry disruptions have rocked distribution and wholesale organizations. The past decade has seen technology lampoon established business-as-usual norms across the distribution supply chain. The result has been thinning margins as distributors — once the bedrock of B2B transport, warehousing, and delivery logistics — compete to do more with less.
No business evolves into a market leader by relying on yesterday’s standard practices. There are many ways distributors can leverage industry challenges into growth opportunities, ones backed by metrics to catalyze your company away from today’s pain points.
1. Direct to Consumer-Inspired Strategies
“Disintermediation” has become the new “d-word” in the distribution and wholesale sector. A growing trend amongst manufacturers especially, disintermediation is the process by which goods are sold from their point-of-origin producers directly to customers, bypassing the distributor “middleman” altogether.
Manufacturers opting for direct-to-consumer sales tend to do so under two circumstances — either an investment in internal logistics technology has allowed distribution to be cost-effectively managed in-house or the manufacturing outfit has consolidated within another, resulting in an organically expanded national distribution network.
Distributors must respond to disintermediation directly not by lowering rates but expanding the services that justify those rates in the first place. These exclusive, distributor-only value-adding services can include add-ons like:
- A complete vendor-management inventory, where clients can self-service inventory purchases to ensure they never run out of stock.
- Automated ordering systems, expediting order lifecycles and making reorders as short and simple as naming their desired reorder points.
- Inventory analytics available for clients to review things like peak and low inventory demand and informing better order schedules in the future.
- Objective manufacturing product reviews, aggregated from separate ratings and reviews across trusted industry sources.
In other words, as a distributor, you may not be able to eliminate the disintermediation trend. But you can outsmart it, offering services no lone direct-to-consumer manufacturer can.
2. Adapting to Customers’ Expectations of Instant Availability
Distributors repeatedly cite mounting pressures to trim cycle times, then broadcasting their improved fulfillment speeds as a differentiator between themselves of their competitors.
Known as the “eCommerce effect” or the “Amazon effect”, both distributors and the manufacturers they serve have been forced to meet today’s instant gratification expectations or simply be left behind.
However, speed for speed’s sake comes at a cost, particularly when ERP systems for distributors and the infrastructure supporting it have not been properly harmonized. The results can be catastrophic.
There’s no arguing B2B and B2C consumers expect products and services faster than ever. There’s also no arguing those expectations can be met through trimmed cycle times. However, today’s demand for speed and instant gratification can be navigated beyond just fulfilling orders on overdrive. To increase operational fluidity and therefore speed, distributors can:
- Use advanced courier software
- Ensure order applications and websites are modern and mobile friendly
- Review marketplace trend updates and analysis
- Provide clients with custom order recommendations
- Offer hassle-free returns
- Create their own distributor rewards or loyalty program — inspired by the likes of Amazon Prime — which can come with tiered delivery speed guarantees
3. Heightened Demand for Supply Chain Visibility
Even the most standard distribution supply chains involve layers. Between material packaging, handling, documentation, warehousing, cargo bookings, and freight forwarding, items checkpoints, insurance and sometimes even customs clearance, distribution supply chain logistics are notoriously complex and multifaceted.
The result can be manufacturers, end recipients and even the distributors themselves feeling like cogs in a machine, executing their functions with little insight or awareness into the broader picture beyond their walls.
Increased visibility into the complete distribution supply chain benefits everyone. Such transparency is a good branding practice — and a key distribution growth opportunity in the years to come as mobile communications, tracking technology and the internet of things (IoT) continue to advance, providing more robust cargo and fleet insights regardless of user location.
Distributors can harness their middleman vantage by using and offering:
- Fleet-tracking GPS devices and analytics
- Mobile-friendly B2B customer portals
- Paperless document management and contract functions
4. Closer Relationships With Customers and Suppliers
Distribution services have relied more and more on automated infrastructure to execute operations and maintain viability in today’s marketplace.
Overwhelmingly, these automation-backed services have been positive for distributors. From invoicing and billing to inventory management and operational boosts like fewer system errors based on manual inputting, automation has brought speed, security and reliability to a range of internal distribution operations that can’t be matched by standard manual processes.
However, automation in the distribution industry has one Achilles’ heel — personalization.
B2B and B2C end users today crave personalization with the businesses they interact with. They want more than a rote transaction, seeking brands that deliver well-rounded experiences, curb pain points and offer solutions before they may even be aware they were needed.
Personalized service offerings are the way for distributors to establish closer relationships with their end users and suppliers alike. Consider differentiating tactics like:
- Customized contracts and quotes
- Personalized kitting services and special assembly
- Product recommendations based on browsing and purchasing history
- Preferred mode of contact forms
Industry software for distributors, such as ERP solutions, can manage these personalized offerings and help your organization deliver best-in-class customer service.
5. Centralized Buying Opportunities and Infrastructure
Centralized buying opportunities are particularly attractive for large customers with their own geographically dispersed network. It allows those retailers and other distribution end users to order inventory across a range of product and merchandise types all through concentrated, full-service distribution vendors. Centralized purchasing is also typically helmed by one team or department, streamlining order management and harmonizing department ordering needs for the client.
In some cases, centralized buying even consolidates the transportation schedules and deliveries of those goods, leading to benefits for the customer like volume bulk discounts, reduced duplicative orders and more.
Distributors have several tactics at their disposal to offer streamlined centralized buying, or mimic its tenets:
- Shared-use facilities located in convenient customer-centric geographic markets.
- Load consolidation with like shippers, moving away from less-than-truckload (LTL) practices into consistent full truckloads.
- Integrated sales and fulfillment data, so customers have the most accurate and up-to-date inventory information for centralized ordering.
- Primary and secondary packaging performed at distribution centers (DC), not at external vendor or regional packaging plants.
6. Greener Warehousing
The business trend of “going green” has reached the distribution sector. Industry research indicates B2B clientele are more likely than ever to seek vendors with sustainable, environmentally conscious systems and operations. They’ll even pay more for products and services committed to sustainability.
Distributors who tailor certain operational practices to be greener embrace this trend head on — and reap cost-savings while doing so. Greener warehousing and distribution is a growth opportunity containing dozens of strategies you can begin implementing today, including:
- Eco-friendly warehousing and DC building materials, refrigeration submeters, LED lighting fixtures, fans, timers, sensors and more for energy efficiency
- Roof-installed solar panels
- Water-efficient landscaping, rainwater drainage systems leading into holding ponds and native prairies
- Methodological and modern recycling systems
- Fleet management tracking and analytics to improve fleet fuel expenditures and carbon footprints
- Paperless warehousing
7. ERP-Informed Inventory Management
ERP software for distributors provides unparalleled granular insights across the full spectrum of your distribution supply chain.
However, not all ERPs for wholesale distributors are alike. Common software pain points in the industry include:
- Siloed data, leading to disparate information in outside sales, inside sales, fulfillment, and inventory stock databases.
- Complicated workflow streams and vertical communication chains where the ERP still doesn’t simplify who to contact when issues or questions arise, what department to reach out to, how and where.
- On-premise rather than cloud-based ERPs, which requires you to be on-site to access and perform any ERP function.
- Lack of real-time data access and updates, without which decision makers lack accurate, informed data for enterprise planning.
When fully integrated, distribution ERPs streamline the major branches of your operations. Everything from proactive inventory management, AI-assisted order fulfillment and tailored warehousing practices to more dynamic customer servicing functions and demand forecasting is consolidated onto one digital platform. Make that platform mobile, with data and applications accessible via the cloud, and you reach new levels of management efficiency and visibility regardless of time or location.
8. A Values-Based Business Approach
Differentiating your distribution services from competitors has traditionally revolved around shortening fulfillment times and beating others’ price points.
In other words, distributors have nearly always prioritized operational excellence over branding and customer relationship management. With thinning margins facing many organizations, who can blame them?
Yet a mounting stock of industry research suggests distributors’ B2B customers do, indeed, care about more than just these hard figures. With more distribution networks to choose from and more disruptors shaking the industry, customers crave the intangible and relational. As a result, wholesale distributors need to set themselves apart holistically, not just technically.
While B2B clientele still places great weight on the speed, reliability, and pricing of your services, they also want to work with organizations whose values align with their own. Presenting company values and leveraging organizational culture has often been put on the backburner when it comes to the wholesale distribution industry. This is a mistake, one that distributors cannot continue to ignore in today’s hyper-competitive and ever-specialized marketplace.
Distributors must hone the values that make their organization tick. Those values must then be imbued across all externally facing channels and collateral, including your formal value proposition, on your online storefront and across your omnichannel platforms.
9. Leveraging Voice of Customer (VoC) Research
Voice of customer research is one of the leading ways for organizations to learn the true expectations, desires, fears, and goals of their everyday customers.
VoC works exactly as its name suggests, involving both quantitative and qualitative research interactions with real clients in both in-person or online research settings. Successful VoC analysis allows distributors to understand better and then maximize their connections with their consumer base.
Investing in VoC research and the direct insights it provides positions distributors to create and leverage many of the following:
- Segmented analytics driven by target customer groups
- In-depth customer profiles highlighting specific groups’ needs and pain points
- Revenue segmentation models
- Risk categories and expenditures associated with each segment
- Distinct content marketing and customer-relationship-management collateral funneled to appropriate segments
- Value propositions which speak directly to target consumers
- Critical needs assessments informing improved customer servicing platforms, portals and interactions
What’s more, the leveraging voice of customer research can help cement your place in your suppliers’ overall logistics chain. Your VoC insights can provide complementary data into why end users order the merchandise from the manufacturers they do. When catalyzed, VoC can even work as a value add-on to your service suite and provide a real distribution growth opportunity few others in the industry possess.
10. An End-User-Conscious Digital Experience
Enrich your omnichannel experiences with value-adding services and user-friendly web designs for your distribution clients.
A strong digital presence isn’t just for commercial retailers anymore. Drawn to many of the same perks and conveniences B2C digital models pioneered, the B2B sector is shifting away from the traditional in-person sales reps and sales territories of the legacy distribution chain. These have a time and a place, yet sales efforts and distribution customer servicing are both buffered by a digital presence geared toward online channels — ones with all the features consumers expect from their online transactions these days.
What does an end-user-conscious digital experience for distributors look like? It involves any of the following:
- Interactive and dynamic websites that are aesthetic and engaging, plus contain all the necessary practical functions a new or existing B2B customer needs.
- Web-based inside-sales functions that make high-value transactions quick and secure.
- Self-service options and affordances across your website, including self-service inventory ordering, tracking and invoice paying, as well as rich customer profiles detailing purchasing history, analytics, appropriate contacts and more.
- Mobile apps providing all the same customer-centric features as your website, with user experience (UX) tested to be simple, clear and easy to use.
- Virtual storefronts showcasing your full-service suite and stock inventory plus make product recommendations and suggest order strategies for discounts.
- Secure customer portals and online payment systems for clients.
- A clear value proposition targeted toward key customer segments.
- Web-based customer service, through amenities like online chatting, email assistance or digital help desks.
- An overall well-designed, professional website conveying your industry authority and acumen, plus maintaining speedy page-load times and overall accurate business information.
Committing to a stronger omnichannel presence is one of the most functional and essential growth opportunities today for distributors. It’s also one of the most approachable, with plenty of options available for organizations to optimize their current web presence and create a more appealing online experience for users.
In short, it’s no longer enough to simply “have” a website for your distribution company. That website must be your branding calling card, conveying to new and old customers alike who you are, what you’re about and how you’re the distribution solution for them.
How Can My Distribution Business Catalyze on Opportunities, Beat Competition and Grow?
Wholesale distribution servicers today face several unique industry challenges. Yet no company ever grew by resting on its laurels, satisfied with a “business as usual” mindset when industry disruptions strike.
Contact Clients First® Business Solutions if you’re interested in discovering ways to differentiate your distributions operations toward a competitive — and cost-effective — advantage. We’d love to answer your questions and help you navigate through today’s many ERP software options to find what works for you.