As 2017 winds down, we’re assessing our experiences from the past year on the distribution side of our business and scouring the Internet learning about other companies’ experiences. We recently watched a webinar, ‘Top Distribution Trends for 2018,’ presented by Industrial Distribution. Going in, we felt like we had a pretty decent understanding of some of the trends facing the industry in the coming year, but we were eager to see how what the presenters, George Swartz and Andrew Lange of Fortna, had to say about answering those challenges.
Photo courtesy of Amazon
First a rundown on the state of the industry. Turns out, it’s a messy place in need of massive transformation. Over and over again, lack of appropriate technology and automation were cited as reasons why wholesale and industrial distributors were struggling to meet higher customer expectations.
Six trends were identified as posing the biggest threats to distributors in 2018:
The needle is inching closer and closer toward automation. A perfect storm of factors such as low unemployment, a quality labor pool that’s drying up - especially in hub cities, rising costs of wages and healthcare, and the wave of retirees with no replacement workforce on the horizon are making the case for tech-driven material handling solutions.
For example, deploying robots for low touch operations, and saving human interaction for more critical functions in the distribution center/chain, increases productivity and is a more efficient and effective use of resources.
WAREHOUSE EXECUTION SYSTEMS (WES)
It is time to upgrade to new enterprise resource planning (ERP) systems or warehouse technology that will track and control your work processes. WES can bridge the gap between legacy Warehouse Management Systems (WMS) and ERP-based WMS. Customers want access - to support staff, to information and data. WES breaks down the customer experience silo and allows them to access the information they need through multiple channels.
THE AMAZON EFFECT - DISTRIBUTION DISRUPTION
AmazonBusiness targets industrial distribution and office products with special savings on the products, analytics, support and free shipping. Amazon shook up the grocery industry this year by acquiring Whole Foods, with more than 450 stores in 43 states. AmazonPrime members get discounts at Whole Foods, either in store or shopping online. Amazon is literally everywhere and it’s virtually impossible to compete. So, what’s a small- to medium-sized enterprise to do?
It seems obvious, but the key is to turn your attention to the things your company can do, that Amazon can’t do. What is your value-add? What differentiates your company? Can you have the most knowledgeable customer support staff? Emphasize product knowledge and service. Fight the battle you can win.
MERGERS + ACQUISITIONS
There is great potential for improvements in cost savings and service as this season of M&A flourishes. Often mergers/acquisitions flush out the less efficient players in the space. You’re left with stronger more resilient companies that remove redundancies and provide a better ROI.
CONSUMER EXPECTION CARRY-OVER
Yes, we said “consumer.” For example, if you know it’s possible for you to receive something you ordered in two days, you tend to expect the same degree of efficiency in your wholesale transactions. And guess what? If you feel that way, so do your customers.
Wholesalers need to innovate solutions to meet their customer’s expectations. What does that look like? Think the way your customers do. They want convenience, so build that into your processes. Be flexible. Embrace technology. This will be different for every company, but it must be done.
BLURRING LINES BETWEEN WHOLESALE + RETAIL
This is the Age of the Value-Added Distributor. Remember B2B? Now it’s D2C/B2C. Customization and personalization is king. Everything about your business is focused on making your customer’s life easier. And who is the customer? Everyone from a wholesaler, to a mom and pop store, to the consumer picking up the product off the shelf or clicking the “Buy Now” button online.
Are you overwhelmed?
Here’s a thought: Don’t imagine that you’re competing against Amazon or any other huge distributor. Instead, imagine that you’re coming up with reasons for your customers to stay with you. Imagine how it will feel when you’ve cracked the code on your company’s workforce vs. automation needs; when you’re taking steps to onboard an WES that can bridge the gaps between your legacy WMS and an ERP-based WMS; when you streamline operations, and begin thinking entrepreneurially about ways to delight your customers with your product knowledge, your service and support. Think about what you can do in 2018 to become the value-added distributor your customers want and deserve.
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