A Positive Growth Mindset for Distributors

A Positive Growth Mindset for Distributors Five success factors and five risks to prepare for What’s Inside… Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Growth is Possible . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Highlighting Proven Growth Factors . . . . . . . . . . . . . . . . . . 6 Preventing Growth from Stalling . . . . . . . . . . . . . . . . . . . . . 8 Technology in the Driving Seat . . . . . . . . . . . . . . . . . . . . . . 10 Survey Methodology and Demographics . . . . . . . . . . . . . . 11 2 | A Positive Growth Mindset for Distributors 1 Source: Epicor Research, November 2015 . See p .11 for full survey details . This eBook and research identify five key factors that growing distributors believe contributed to their business growth last year, and five risks that distributors believe may prevent or weaken growth in the following year . Even if you do your best to try to plan for future growth, there will be surprises along the way . This eBook highlights the importance of being able to plan accurately for growth, and suggests areas of your business that you can critique to assess your ability to effectively plan for growth . The eBook concludes that, whether addressing risk factors or embracing growth factors, it’s their IT systems that will make or break distributors’ growth ambitions . With the right IT in place, they’ll be Executive Summary A recent survey of almost 300 distributors conducted by MORAR on behalf of Epicor1 reveals that 63% of distributors expect to grow their business in the next 12 months. “ We have grown 30-40 percent in sales without adding a proportionate number of human resources. Using Epicor Prophet 21, we can do more with less.” Jonathan Soon, Royal Corporation able to make better and faster decisions, helping them provide better and faster service to customers even as they grow, increasing their agility and their profitability . 3 | A Positive Growth Mindset for Distributors But the road to growth isn’t always a smooth one . Our survey also highlights a range of risks that distributors believe threaten their growth ambitions, and in this eBook you’ll discover how you can overcome those risks to ensure your growth isn’t derailed before it can begin . Our survey reveals that while distributors foresee challenges in the coming year, with shifting priorities around growth in 2016, 63% of distributors still do expect their business to grow—with that number increasing to 70% in the Americas . And although the distribution industry as a whole is cautious about growth3, over half (57%) of our respondents achieved growth in the past 12 months . Whatever your growth plans—from the ambitious to simply maintaining a healthy business—effective planning will surely increase your chances of success . This eBook outlines five factors that distributors in our survey who grew last year identified as contributing to their success . Growth is Possible What’s your business priority this year? In a recent forecast published by the Institute for Supply Management2, 60 percent of distributors expected growth of 3.2% in 2016, with an additional 30% expecting revenues to remain at the same levels as 2015. 2 Source: Top Trends for 2016, December 2015, Modern Distribution Management 3 Source: Top Trends for 2016, December 2015, Modern Distribution Management 4 | A Positive Growth Mindset for Distributors Technology as a key enabler of growth 77% of our respondents agree that an effective and integrated IT infrastructure is essential for business performance, a sentiment echoed by Gartner research: “The 2015 Gartner CEO and senior business executive survey found that growth remains a top priority, and technology-related change is viewed as the primary tool to achieve that growth in 2015 and 2016 .”4 Aberdeen agrees with this assessment too, stating that “wholesalers and distributors rely on ERP in order to meet demand and ensure orders are fulfilled on time while providing full visibility for decision-makers .”5 At the end of this eBook, we’ll consider the role of technology in helping achieve growth . 77% of our respondents agree that an effective and integrated IT infrastructure is essential for business performance 4 Source: Gartner CEO and Senior Business Executive Survey Shows Technology Related Change is a Higher Priority Than Ever Before, 2015, Gartner, Inc . 5 Source: Cloud ERP in Wholesale and Distribution: Driving Success across a Wide Network, 2016, Aberdeen Group, Inc . 5 | A Positive Growth Mindset for Distributors 6 Source: What has Changed in Wholesale Distribution: 2015 and Beyond, February 2015, Aberdeen Group, Inc . These findings reflect previous research from Aberdeen6 which suggested that these factors would be essential for growth last year . And while it’s no surprise that hard work and determination made the list, the remaining four factors give you a starting point when determining whether your organization is set for success—or whether there’s room for improvement . Highlighting Proven Growth Factors Our survey uncovered five factors that distributors who reported growth in the past 12 months said were essential to their success: Good planning Whether you’re planning sales strategy or trying to manage rework more effectively, having ready access to accurate and timely information is key . Without the right data and analytics: XX Financial reporting and decision-making is slower and harder XX It’s impossible to know who your best customers are and where your profit is coming from XX You can’t be sure that your operations are running as efficiently as possible Staff with the right skills As a new generation enters the world of work, meeting their expectations while holding on to skilled staff is essential . But it’s not easy . All too often: XX You spend too much time and money on recruitment, and employees struggle with your complex systems, which lack desirable features such as mobile access XX Key people leave before you can replace them, draining the knowledge and expertise within your organization Good planning Good planning XX Good planning (54%) XX Hard work and determination (48%) XX Staff with the right skills (36%) XX Had the right IT in place (34%) XX Agility and response to market demand (34%) 6 | A Positive Growth Mindset for Distributors The right technology IT is driving business growth everywhere, and it’s no exception in distribution . Without the right technology: XX Delivering eCommerce and other new innovative services will be difficult or impossible XX You’ll struggle to gain quality financial analytics, hampering your decision-making ability XX Growing staff numbers, transaction levels, and market reach will put pressure on your systems, affecting quality and customer service Agility and response to market demand As global competition increases, responding to customers and quickly adapting to market changes are essential to staying ahead . If your IT systems aren’t up to the job: XX Opportunities will be snapped up by competitors before you have a chance to react XX Adding new services such as kitting or assembly will be difficult or impossible, damaging customer service and your growth potential Good planning Good planning 7 | A Positive Growth Mindset for Distributors Preventing Growth from Stalling Despite their successes, distributors are maintaining a conservative outlook on growth in 2016. But what’s holding them back? Our respondents identified five adverse effects of business growth: Business growth may put excessive pressure on operations, damaging quality and customer satisfaction If your operations aren’t geared up for growth, you could run into difficulties: XX New services such as managed inventory or light production will put existing operations under pressure XX Slower service will reduce customer satisfaction— prompting defection to competitors Senior executives in the business may not be fully prepared for the challenges of managing a larger, more diverse business If senior management can’t couple an overall view of the business with the ability to make good decisions quickly, they may struggle: XX Lack of real-time and relevant information will force executives to rely on gut-feel for decisions XX Disparate systems with no mobile access will make management less responsive, threatening profitability XX Business growth may put excessive pressure on operations, damaging quality and customer satisfaction: (45%) XX Senior executives in the business may not be fully prepared for the challenges of managing a larger, more diverse business: (43%) XX Workloads may increase to a level that places too much pressure on staff, prompting key people to leave: (43%) XX We might take on large/complex projects that we lack the skillset and technology to deliver effectively, and damage our brand reputation: (41%) XX Unplanned business growth may lead to unexpected consequences which would have a negative impact on the business: (39%) Good planning Good planning 8 | A Positive Growth Mindset for Distributors Workloads may increase to a level that places too much pressure on staff, prompting key people to leave If you can’t give your employees the tools they need to manage growing workloads, it’ll soon show: XX Inefficient and complex systems will increase stress—while compromising customer service XX Prospective new employees will be less inclined to work for you, leaving a skills gap in your organization We might take on large/complex projects that we lack the skillset and technology to deliver effectively, and damage our brand reputation If you don’t have the systems in place to deliver what your customers want, completing increasingly large and complex projects may take a toll on your business: XX Lack of services such as eCommerce or CRM will lead to disengaged customers XX An inability to plan, manage, and analyze greater or more complex workloads could reduce operational efficiency Unplanned business growth may lead to unexpected consequences which would have a negative impact on the business Distributors who don’t plan for growth will struggle to keep both sales and profits from dipping: XX Without real-time analytics into your operations and your customers, you’ll find yourself unable to offer the right products and services efficiently XX You won’t know whether your IT or operations can handle customer demand, potentially putting your ability to deliver under threat Good planning Good planning Good planning 9 | A Positive Growth Mindset for Distributors Technology in the Driving Seat Our survey results show what distributors view as the secrets to their success, and the potential obstacles to growth. The common theme across all of these findings is that technology will make the difference between success and failure for distributors. The right IT systems will ensure that your business can plan future growth productively, and will also make the business agile enough to handle whatever opportunities next year throws at it. Ultimately, a distributor’s choice of IT systems will define how far, and how fast, they can grow profitably. Time to take a critical look at your environment Having the right ERP system in place will help you make growth a reality . It’s worth asking key questions of your IT environment to ascertain whether it can support your growth plans: XX Can you get instant access to accurate, real-time data and analytics to grow sales and profits? XX Do your systems support the way your employees work, and are they attractive to a young workforce? XX Can you get a view of your entire organization to spot opportunities to improve, optimize, or offer new services? We hope that this eBook gives you a fresh perspective on your IT environment and helps you identify areas where investment and modernization might be prudent . Visit our growth resource center to find content that will help you further understand how you can use your IT investment to fuel growth . “ We’ve always tried to build our company for the future. So while it would have been easier to just stay with Acclaim, we knew that Prophet 21 had a more favorable architecture that made it better suited for evolution and development. We invested in the solution as much for what it could do at the time, as for what it would be able to do down the road.” John Wiborg, President, Stellar Industrial Supply 10 | A Positive Growth Mindset for Distributors Survey Methodology and Demographics The 2015 research, commissioned by Epicor and conducted by MORAR Consulting, is based on interviews conducted with more than 1,800 individuals in a variety of industries. This eBook (and the demographics below) focus on the distributors we spoke to in our survey. 16% USA 24% 100-249 employees 28% 250-499 employees 24% 500-999 employees 24% 1000+ employees 16% Germany 12% United Kingdom 11% China (incl.Hong Kong) Canada 7% Australia 7% Mexico 6% Singapore 6% France 10% Sweden 5% India 4% Distributor split by country: Distributor split by size: 11 | A Positive Growth Mindset for Distributors The contents of this document are for informational purposes only and are subject to change without notice. Epicor Software Corporation makes no guarantee, representations or warranties with regard to the enclosed information and specifically disclaims, to the full extent of the law, any applicable implied warranties, such as fitness for a particular purpose, merchantability, satisfactory quality or reasonable skill and care. This document and its contents, including the viewpoints, dates and functional content expressed herein are believed to be accurate as of its date of publication, March 2016. The usage of any Epicor products or services is subject to Epicor’s standard terms and conditions then in effect. Usage of the solution(s) described in this document with other Epicor software or third party products may require the purchase of licenses for such other products. Epicor, the EPICOR logo, Prophet 21, and Grow Business, Not Software are trademarks or registered trademarks of Epicor Software Corporation in the United States, certain other countries and/or the EU. Copyright © 2016 Epicor Software Corporation. All rights reserved. About Epicor Epicor Software Corporation drives business growth . We provide flexible, industry-specific software that is designed around the needs of our manufacturing, distribution, retail, and service industry customers . More than 40 years of experience with our customers’ unique business processes and operational requirements is built into every solution—in the cloud, hosted, or on premises . With a deep understanding of your industry, Epicor solutions spur growth while managing complexity . The result is powerful solutions that free your resources so you can grow your business . For more information, connect with Epicor or visit epicor .com . 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