For distributors the commercial world is changing; ensuring that end users can buy from you in a competitive marketplace is becoming more complex.
Traditionally, for distributors “word of mouth” was the predominant sales channel, a handshake from a member of the field sales team secured some business, backed up by a telesales team reacting to repeat orders over the phone – driven by customer orders rather than by what stock you wanted to promote.
The major challenges to the distribution sector could be condensed to increased logistics costs from rising fuel costs, a changing marketplace with the introduction of competition from manufacturers and retailers, fluctuating interest rates affecting import and export markets.
In today’s digital wholesale environment, the distribution link in the supply chain is the squeezed middle; reacting to changes in consumer behaviours, the need for improved inventory and logistics efficiencies, driving down “cost to serve” against a backdrop of the need to improve margins.
So how can distributors help themselves in this context?
Omni-channel demands for distributors
According to research published by Aberdeen Group, eCommerce and multi-channel or cross channel demand impacts 87% of companies affecting order, inventory and fulfilment processes. Multi-channel is no longer an emerging trend, it is here and now – and those distributors who have not prepared for this environment do so at their commercial peril.
Modern distributors, as a matter of course, should have a fully developed online product catalogue in order to extend their markets beyond traditional limitations. This of course opens up new challenges both in terms of inventory integration with other channels, availability-to-order, user interface for your website, a fully rounded sales, marketing and service process, plus increased visibility and controls over processes.
Where B2C and B2B converge – the increasing importance of eCommerce
It is interesting to see that in another Aberdeen Group report, 61% of distributors have a direct to end consumer delivery model (increasing 30% from just two years ago) – so this is now exposing the sector to new customer service requirements at a fast pace.
For those considered “best in class” within the report, by responding well to the modern converged distribution landscape – organisations achieve a better cash conversion ratio (30 days vs 59 days), a healthier logistics cost percentage (12% vs 25% of revenue) and a happier customer base (97% vs 84%).
What is the difference between success and failure for distribution companies?
These statistics illustrate that by responding to rather than ignoring today’s more complex distribution network, businesses can make major improvements across the business – both increasing revenues and driving down costs.
Here are a few areas to consider:
- Investing in business process review and changes across the organisation, supported by integrated technology
- A common platform across purchasing, supply chain, finance and logistics to support KPI performance management for visibility across multiple product lines, carriers, channels and audiences
- Encourage collaborative working across your business and your supply chain
- Having the visibility across the business to make informed decisions from inventory forecasting, targeted sales & marketing campaigns, customer care SLAs, delivery problem resolution
- Not just a multi-channel approach – but omni-channel – having the systems in place to put your customer at the heart of your business; so they can easily move between the different channels that suit them with a consistent experience of service, pricing and availability
How Prodware can help distribution companies adjust to the integrated world
Prodware support our distribution clients with reviewing their business practices and have developed an industry-specific business management platform, based on Microsoft Dynamics ERP which deliver an integrated, end-to-end approach to distribution management from procurement, inventory planning, sales and marketing, customer care, warehouse management, finance and fulfilment and route planning.
With additional integrated tools such as dashboarding to help you track and resolve KPIs with Business Intelligence and eBusiness suite to support your online presence which connects directly into your ERP– the modern distribution company is well equipped to improve their performance and therefore their margins. Contact us today to find out more about modernising your distribution channels.