White Paper

Checking In on Distribution

Published on

June 15, 2020

By

by

Tyler Thomas

As we work towards rebuilding and reopening our economy, unique opportunities wait to be discovered by those individuals and industries who choose to see the economy optimistically. One such industry where there is potential for growth is distribution. The distribution industry has already been undergoing significant change with consumer expectations of speed and quality at an all time high. As if this were not enough, COVID-19 has given consumers even more reason to be conscious of how the products they order are being handled and delivered to their homes. Amid the global pandemic, health consciousness is at an all-time high. Through these trying times, we have taken a pulse distributors to understand what obstacles are impacting the industry and what kinds of tools are in use to tackle these new challenges.  

The survey conducted asked distributors about the impacts to their consumer experience, threats that impact the industry, and which tools go into their strategic operations and planning. Some of the issues and threats that we found are simply outside of the control of the industry: global stability affecting the supply chain, a global pandemic, and domestic fees/taxes. Other obstacles, however, are within the scope of control: the demand for more powerful software, access to more data for planning purposes, and more access to information for the consumer. Going into the survey, we expected one of the more significant challenges for distributors to be the industry shift of wholesalers and manufacturers expanding their services to include the manufacturing, distributing, and selling processes themselves. After reviewing the results of the survey, we found that this is indeed a real industry trend with significant impact. While this competition remains problematic to the industry, distributors are managing to find the sustainable industrial advantage to compete and exceed. After the survey was complete, there was one major identifiable challenge that the industry will have to overcome moving forward into this post-COVID world. That major challenge is the chaos that can be internal operations.

The term “internal operations” covers a wide area of potential issues within a distribution company. These issues can be anything from employee mistakes to identifying meaningful data points for executive decision making. Whatever the case may be, most of the controllable issues discovered in the survey can be boiled down to internal operations. This simplification is both good news and bad news. The good news is that many issues can be consolidated into one group—making negative business issues easier to identify and solve. Conversely, the bad news is that decisions involving internal operations need to be given an extra level of caution and potentially even more time. The goal for internal operations should be to remove as much confusion and unnecessary red tape as possible. Clarity within the organization and empowerment of employees means faster and more efficient resolution. Within internal operations, one of the most important decisions is how inventory and employees are managed. Amid all the options available to the distributor, which is the best option for managing inventory and employees? This is where technology comes in!

Powerful software improvements can have a domino effect giving distributors a competitive advantage moving forward as the economy recovers. First, having the right kind of software that is easy to use and understandable significantly lowers the probability and effect of human error. Second, the software that provides the best kind of data in the easiest form to understand is one of the most powerful weapons in internal strategic planning. Third, a powerful management system combined with industry experience creates a sustainable competitive advantage for the distribution industry, and it is that sustainable advantage that acts as a shield against manufacturers and wholesalers looking to expand into distribution and other competition facing the industry. Choosing the right kind of management system is going to be crucial, and in some cases, the determining factor to set the distribution industry up for the best opportunities for growth as the economy heals itself.

Conclusion: 

The survey showed that some industry leaders are taking the lead in the technology race by beginning to leverage their operational software as a competitive advantage. However, too many of those surveyed could be outpaced by others with more powerful tech. In addition to new competition, industry leader’s consumers demand more information, whether that takes the form of brick and mortar location or price comparability. As our world becomes increasingly accessible and interactive via technology, so too will customers and employees expect that same kind of interaction with the businesses with which they engage. Now is the time to be ahead of the game and be apart of building that interaction for your consumers and employees. 


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