The past couple of years have been extraordinary times. The impact of the global pandemic, Brexit in the UK and global instabilities continue to cause supply chain volatility and disruptions. These supply chain disruptions have resulted in the need for highly agile organisations that are responsive to ever-changing market needs.
Recent research from the Office for National Statistics (ONS), suggests that almost one-third (30%) of businesses in manufacturing, wholesale and retail trade reported global supply chain disruption. Furthermore, 1 in 20 UK businesses reported that they had made changes to supply chains because of the end of the EU transition period.
These recent changes have also led to shifts in customer expectations. Customer expectations are rising, they expect shorter lead times for example, and distributors need to carve out new revenue streams and use real-time data, predictive analytics and automation to increase supply chain efficiencies, lower costs, reduce downtime, increase productivity and quality and increase supply chain resiliency.
Building resilience in the supply chain means it can withstand the impact of both short-term and long-term disruptions. It can recover quickly and meet business obligations without a significant impact on service levels. One way to build resiliency into the supply chain is to leverage a distribution-specific ERP solution to revolutionise the way you do business; gain real-time, business-wide visibility, identify and manage bottlenecks and future-proof the business.
A changing distribution landscape
Online marketplaces have dramatically reshaped the landscape for distributors of all sizes. The distribution industry is in the middle of a big shift and modernisation has become an imperative for survival.
Given changes in technology, evolving buying patterns, availability of real-time data and advances in artificial intelligence (AI), the key to thriving in today’s marketplace is having the right product, at the right price, at the right place and at the right time…frankly, just as it has always been – but with the new challenge of ‘instant’ communication, visibility and alerts. Adjusting your business model to keep up with this rapid change can be daunting, but it also presents an opportunity to capture a larger market share.
So, how can distributors streamline their priorities in this ever-changing landscape?
To capitalise on the digital opportunity, distributors should consider:
- Improving the customer experience by becoming a value-added distributor
- Becoming a real-time distributor
- Innovating with inventory
1. Becoming a value-added distributor
Distributors may already have been providing value-added services. Although distributors might not recognise ‘servitisation’ as a term; likely, many have already incorporated simple value-added services – such as product selection, picking, packing and shipping.
However, there are more advanced services that distributors should look at which could increase profitability and differentiate themselves from the competition. These could include:
- Product installation and component assembly
- Product customisation
- Field service, maintenance and quality inspection
- In-house repair
- Just-in-time delivery
- Training and education
To take advantage of servitisation, distributors must be data-driven to define and create new services. They must look at business management solutions that can manage, date, and deliver data as a view of all actions that are happening within the organisation. With this information, manufacturers are armed with data which allows them to identify where new service opportunities exist.
2. Becoming a real-time distributor
Today’s distributors are expected to think and act in real-time to keep up with customer expectations. In the past, they may have relied on historical data to base their forecast, but this doesn’t provide the accuracy and deep insight needed to meet current productivity and efficiency demands.
Digital transformation makes it possible for greater operational flexibility and insight into customer needs. Distributors can be online 24/7, offering customers a self-service experience where they can place orders, update quantities and schedule at their convenience; this is what many of today’s customers now expect.
Real-time analytics could be crucial for a distributor with a lot of “moving parts” in their processes, as it’s an essential tool to handle logistics in this all-hours agile manner. Automated alerts could inform actions based on changes in demand or other factors.
With easy-to-use data, in conjunction with analytical capabilities, distributors could better plan and forecast demand (improving customer service and reducing costs) as well as inform changes in workflows, such as combining shipments.
In addition, the Internet of Things (IoT) allows distributors to use connected devices, products and tools equipped with sensors that can talk to each other and collect and store data. They can partner with manufacturers and retailers to access data in real-time.
To make the best use of data to drive informed and timely decisions, wholesale distributors must replace legacy siloed systems which could prevent information and insight from being used across the business.
3. Innovating with inventory
Connectivity and the ability to use data in new ways have ushered in a new era of supply chain visibility. The digital world allows distributors to dynamically connect with their partners. With in-transit visibility, they can track shipments as they move, with any delay triggering an immediate alert.
Distributors can also use analytics to interrogate historic sale patterns to help plan when they need to build up inventory or scale down and run on less inventory, depending on demand. This allows businesses to make commitments or allocations based on supply since they know where and when inventory will be available.
The above key ways are examples of how a distributor can adopt digital transformation to streamline their priorities.
Download our Inventory Excellence On-Demand Event to watch a demonstration on how to optimise inventory processes with Sage X3.
Download our guide: Distribution without disruption to find more useful information on how to capitalize on the digital opportunity.