Distribution business trends for 2019, the year of moving strategically
If there’s one big message we’ve taken away from our latest conversations with our customers, it’s that the year has started even faster than usual, with great opportunities opening up for companies that are determined to seize them. Kelly Squizzero, Infor’s Director, Industry & Solution Strategy, points to five key business trends that are shaping distribution business in 2019.
1. An omni-channel shopping experience
More than ever before, customers expect and successful distributors are delivering a seamless, omni-channel shopping experience. “Distributors have to allow customers to shop the way they want to, whether they’re calling their orders in or walking into a branch,” Squizzero said. “They might be buying online or sending in their orders by email or text.” The adaptation can be a challenge for some distributors, but it’s utterly essential: Customers who can’t choose their own pathway to complete a transaction will be more likely to look elsewhere the next time they shop.
Squizzero adds that the systems to support omni-channel sales go beyond customer-facing tools: sales channels and compensation have to be integrated across all channels, providing customers with the same contacts, information, and experience wherever they turn.
2. Holding your ground by expanding it
For some years now, Infor business analysts have seen the lines blurring between distribution, manufacturing, and retail. The trend represents a threat to distributors who stand still, but a big opportunity for anyone who believes the best defense is a strong offense.
It’s easier today than ever before for a manufacturer to sell direct to end users, or for a big end user like a hospital to set up its own distribution center to deal directly with manufacturers. The most forward-looking distributors already know how to respond: To differentiate themselves they’re getting into rental services for customers who only have occasional need for key tools or equipment, offering to manage inventory on their customers’ behalf, or adding warranty and service for the products they represent. Squizzero says warranty management and service can offer a steady stream of income with higher margins for distributors who’ve become accustomed to the tight margins that apply to the initial sale.
3. Improving operational efficiency
Speaking of tight margins…it wouldn’t be a new year if distributors weren’t looking for the latest ways to boost operational efficiency. But in 2019, flawless execution isn’t just about protecting revenue: it’s at least as important to protect the customer experience.
Cost controls are as crucial as ever, Squizzero says. But meeting customers’ expectations—by getting the correct order out the door on time—is still one of the surest ways for a successful distributor to win in a shifting marketplace. Delivering on that promise depends on how much inventory you carry, how it moves through your warehouse, how efficiently you receive it and put it away, and ultimately on adopting mobile-enabled warehouse management systems that eliminate paper and minimize errors. Distributors have also been paying close attention to rebate management, and to the ability to use data science to better understand customers and maximize margins.
4. Big insights from big data
Making best use of the mountains of data at distributors’ disposal means moving beyond traditional business intelligence systems, Squizzero stresses. “It isn’t just about generating reports and enquiries and summarizing the data,” she says. “It’s about gaining insight,” and using artificial intelligence (AI) to integrate and interpret the knowledge available in different areas of the business.
Pricing Science is just one example of the knowledge that big data can deliver, she explains. Data collected through simply processing daily transactions can be brought together to make predictions about how much customers are willing to pay, based on what you know about that customer and customers like them—helping you anticipate product price sensitivity and optimize profitability. The strategic insights available to a data-driven business can also lead to more tailored product offerings, or new relationships with a distributor’s suppliers that produce better, more reliable revenue for both.
5. A dynamic workforce
The predictions about a looming labor shortage were right, and that shortage has well and truly hit—not just in distribution, but across the economy. So it’s never been more important to attract, train, and retain the next-generation workforce by offering new hires the kind of IT experience they’ve come to expect at home.
“Nobody wants to work for a company that uses archaic systems,” Squizzero says. “Employees want to be empowered and productive by technology that allows them to work as they live, with powerful search engines, mobile capability, dashboards, and tools that make their lives easy.”
The high expectations come into play as soon as a new employee begins training for their position. “If you don’t have documented practices and training methods, it leads to frustration. The way people want to learn today is different, they use how-to tutorials, videos and similar,” she warns. “People quit if they don’t feel they can quickly be productive.”
It’s a challenging business environment. “We work with customers to help them understand how to leverage technologies like AI and Internet of Things to develop disruptive business models. Squizzero says. “You need to have a strong digital foundation to support this level of disruption.”
The good news is that Infor customers have easy access to the software products and services that turn each emerging business issue into an opportunity to grow, succeed, and thrive.
Check out this on-demand webinar to learn more about the potential applications of AI and hear why AI is a game changer for one of our customers.