Traditional distribution approaches are under pressure from many angles currently, are these changes in the supply chain worth evolving your distribution strategy over? Yes.
Disruptive entrants to the distribution space such as Amazon have reached right across the traditional supply chain, from manufacturing through to retail – and have raised the expectations on service for the modern customer.
With the recent news that Amazon have made further impact with their acquisition of Whole Foods, an article in The Grocer states this as a further twist in the continued road of shortening the supply chain: “the biggest victim of Amazon over the coming years will not be the big supermarkets, but big wholesalers and distributors. The wholesale market is a perfect candidate for disruption. Technology has consistently eliminated middlemen from traditional business models.” With the launch of Amazon Business, B2B consumers will now benefit from the same procurement service as they do in their personal lives; causing further disruption to the traditional delineation of our “work and play” personas.
How are distribution firms reacting to the changes in the supply chain?
Whilst there are words of warning about cutting too much of the middlemen in the route to market, distributors that have been in business for many years are evolving in how they manage their business in order to become more competitive.
Take AF Blakemore’s rationalisation of their lines into retailers, whilst also reviewing their depot inventory management; to focus on category rather than brand to avoid a proliferation of similar products. This sort of category management can only be carried out with a firm grip on data analysis and knowledge of sales information.
Whilst Amazon’s delivery drone concept is transformative, distributors are embracing modernity and alternative methods in other areas too, take “the last mile” and fleet management. As diesel vehicles are being reduced under government emission guidelines, distribution and delivery firms are reviewing the use of electric vehicles. Royal Mail are trialling 100 electric vans in London, and Menzies Distribution have acquired the largest all-electric delivery fleet in the sector.
These are just two examples, whichever route you choose to take in the “digital transformation” journey you will need to be armed with up-to-date business information in order to inform your decision-making. Throughout your strategic thought process, the only way to weigh up risk and reward is by having a holistic view of your business’ performance. Your business management software should reach across all departments from finance, to sales, to service, to warehouse and logistics. Speak to our distribution software specialists at Prodware to discuss the correct approach for your business in order to succeed in today’s competitive market.