One of the criticisms of distributors and manufacturers over the years has been their reluctance to adopt new technologies. I still remember visiting a distributor in the late 1980s who didn’t want computers because his father didn’t need them and neither did he. He was still using the Kardex system.
But all that is changing as manufacturers and distributors – as well as some retail challengers – are using technologies such as digitization, robotics, machine vision and, now, artificial intelligence.
A study earlier this year by Deloitte and the Manufacturing Leadership Council shows that manufacturing appears well-positioned for the adoption of the industrial metaverse.
Given their continued focus on digital transformation and their journey toward the smart factory, the majority of manufacturers surveyed by Deloitte have made significant investments and are already using the foundational technologies that power the industrial metaverse.
The study showed that companies are generally either implementing technologies like data analytics, cloud computing, AI, 5G and Internet of Things technologies across multiple projects and processes, or they are currently experimenting with one-off projects. The same is true for 3D modeling and 3D scanning.
Deloitte gave an example of a global logistics company that has deployed augmented reality for order picking in its warehouses. Graphics displayed on AR glasses guide workers through the warehouse and provide order picking instructions, resulting in increased picking efficiency, fewer errors and improved onboarding for new workers.
“A Digital Edge”
Home Depot store associates now have a new mobile app developed to help them prioritize tasks more effectively, and distributors that serve the construction market should take notice.
The home improvement giant’s “hdPhones” are equipped with wi-fi capabilities, a scanner and all-day battery strength, allowing associates to locate products quickly and assist customers inside and outside the store.
“We are building a digital edge, using technology like machine learning, IoT, cloud automation, proprietary innovations, data-driven customer insights, continuous delivery and more, that will help strengthen our lead for our next 100 years,” said Ted Decker, CEO of HD, in a call with financial analysts.
“With more than 75% of U.S. orders originating through a digital channel, our work makes a difference by helping hospitals, manufacturers, airlines and others rapidly find and receive the products they need,” he said.
Just a few months ago, Grainger Technology Partners, a venture capital investment vehicle for W.W. Grainger Inc., invested in FieldCentrix Inc., an Irvine, California-based developer of web-based wireless software solutions for communications equipment that is used by field-service workers, such as electricians, plumbers and other tradespeople.
With FieldCentrix’s enterprise software package, electrical contractors, according to Electrical Wholesaling magazine, can load hand-held computers with key information, such as electrical distributors’ electronic catalogs, system diagnostics, on-site repair procedures and pricing information. The software also helps contractors submit time sheets and report services performed, electrical supplies used, travel time and expenses remotely from job sites via an internet connection.
Targeting Last Mile
While technology has increased in a number of functions within a distributorship or manufacturer, there is a growing movement in “last mile delivery.”
A number of distributors are using companies like Dispatch to help their last mile deliveries. Dispatch is proving valuable to its network of independent drivers with route optimization software and an easy-to-use platform, reducing delivery time for drivers and customers and improving its supply chain.
Dispatch optimizes logistics for industries that benefit from keeping workers focused, including HVAC, building products, electrical, paint, plumbing and industrial machinery. Using the Dispatch Marketplace pre-approved independent contractor, drivers can use route optimization that helps drivers deliver faster, using fewer miles, while sitting in less traffic. The platform also provides transparency for B2B customers by providing ETAs and photo proof of order delivery.
The company delivers job site materials in as little as 90 minutes using its unique platform, utilized by both its B2B customers and network of drivers.
E-Commerce a Priority as Digitization Persists
Fastenal, meanwhile, continues to have big plans for e-commerce, a business that grew 41% during the last quarter.
“That’s really a case of the marketplace saying to us, we’d prefer to purchase from you this way. And our team in the field and our team in technology [are] building an ever-better mousetrap to serve into that market,” said Dan Florness, the company’s CEO, on a recent call with analysts.
Fastenal Co.’s digital sales accounted for 57% of total sales for the third quarter, up from just under 50% a year ago. That includes sales via internet-connected vending machines and Fastenal.com.
He added that the industrial and construction products distributor is eyeing a larger digital share of total sales by the end of this year. Florness said he expects the growth trend to continue over the long term.
“Our challenge is targeting 60% sometime before we exit this year,” Florness said. “And our long-term expectation is at that 85% we talked about in the past that we believe will be part of our digital footprint.”
Distributors are making major strides in using technology. The question for smaller distributors is can they – and are they willing to – make the necessary investments to implement new technologies and pursue technological advancements.
Jack Keough is the president of Keough Business Communications and the former editor of Industrial Distribution. You can reach him at [email protected].
