Infor
© 2016 Gale Media, Inc.
Digital Strategy in Distribution:
Keeping a Customer Focus
in a Digital Age
Whitepaper: Digital Strategy in Distribution 2
© 2016 Gale Media, Inc.
As customer demands continue to change, distributors are making strides with their digital
strategy. Nearly half of respondents (44.3 percent) to Infor/MDM survey “Keeping a Custom-
er Focus in a Digital World” indicated they had a comprehensive digital strategy. In the 2015
digital strategy survey, it was only 31 percent.
Improving the overall customer experience was the primary goal for technology investment,
followed closely by improving operational efficiences.
Although the current preferred methods of buying are email and calling in orders, according
to 32.8 percent and 28.6 percent, respectively, of survey respondents, distributors expect
these numbers to change. More than half (52.1 percent) said they expect online buying to
experience the biggest growth, followed by mobile ordering (16 percent).
With these numbers in mind, e-commerce is again the platform in which most survey respon-
dents (65.3 percent) are considering investment.
Respondents to this year’s survey also indicated that the C-suite is driving many technology
decisions. More than one-third of respondents (34.1 percent) said those decisions are man-
dated from the top down, with some lower level input, while another 28.5 percent have a
chief information officer or equivalent who decide the company’s technology needs.
Executive Summary
Whitepaper: Digital Strategy in Distribution 3
© 2016 Gale Media, Inc.
The survey results presented in this whitepaper are the result of an online survey of readers
from MDM (www.mdm.com) in September and October 2016.
MDM is the only specialized information business that provides high-level in-depth resources
to executives who are in or serve the wholesale distribution industry. It completed a survey
in conjunction with Infor (www.infor.com), which builds business applications with last mile
functionality and scientific insights for select industries delivered as a cloud service.
Most survey respondents (60 percent) identified as wholesale distributors; 19 percent were
manufacturers, with the remaining identifying as hybrid models or other. More than a third
(37.2 percent) of respondents identified as an executive (CEO, COO, CFO, etc.) or owner
of their companies, with the remainder indicating they are at the vice president, manager or
director level.
Size distribution of respondents was diverse with 7.1 percent of respondents below $2 million
in annual revenues; 8.9 percent between $2 million and $10 million; 25 percent between
$10 million and $30 million; 8.9 percent between $30 million and $50 million; 14.2 percent
between $50 million and $100 million; 8 percent between $100 million and $250 million; 9.8
percent between $250 million and $500 million; 3.6 percent between $500 million and $1
billion; and 14.3 percent over $1 billion.
Methodology
Whitepaper: Digital Strategy in Distribution 4
© 2016 Gale Media, Inc.
Almost half (44.4 percent) of survey respondents said they have what they consider a compre-
hensive digital strategy that includes all types of software and solutions, up from 31 percent in
last year’s survey. And 34.7 percent of respondents said they maintain a general approach to
their digital strategies, down from 53.5 percent a year ago.
Overall Approach to Digital Strategy
Survey respondents said they have a number of goals they hope to achieve with their technology
investment, but two rose to the top as the most important. One-third of respondents to the sur-
vey said they want technology to improve the overall customer experience, while 30.9 percent
said they want to improve operational efficiencies and 13.8 percent want to improve profitability.
Primary Goal with Technology Investment
Comprehensive digital strategy
that includes all types of soft-
ware and solutions
44.4%
General strategy for upgrades, and
some innovation (not comprehensive)
34.7%
No strategy, per se, but always
evaluating options
14.5%
Only what we absolutely need at any
given time
6.5%
Improve overall customer experience
Improve operational efficiencies
Improve internal communication/
cooperation
Improve customer engagement
Improve customer service
Improve profitability
6.5%
6.5%
8.9%
13.8%
30.9%
33.3%
Whitepaper: Digital Strategy in Distribution 5
© 2016 Gale Media, Inc.
Distribution continues to lag other industries in terms of customer buying preferences. While
32.8 percent of survey respondents said email is the preferred customer buying method, another
28.6 percent said their customers call in orders and only 13.4 percent prefer online ordering.
Customer Experience: Buying Preferences
Despite a small percentage of customers currently ordering online, it is the dominant area where
companies see the biggest growth.
With regards to the previous question, where do you see the biggest growth?
How do most of your customers prefer to buy from you?
Using a mobile device
In person at the
customer location
Other
Using EDI
Online, self-service on a
computer
Calling in the order
Using email
0.8%
4.2%
5.0%
7.6%
7.6%
13.4%
28.6%
32.8%
In person in a branch
Using a mobile device
In person at the
customer location
Other
Using EDI
Online, self-service on a
computer
Calling in the order
Using email
0.8%
2.5%
2.5%
3.4%
10.9%
11.8%
16.0%
52.1%
In person in a branch
Whitepaper: Digital Strategy in Distribution 6
© 2016 Gale Media, Inc.
A majority of survey respondents (60.5 percent) said customers tell them how they prefer to
buy through polls and talking to salespeople, while only 16.8 percent use analyzed data around
shopping behavior to determine this and 15.1 percent said they don’t know.
Customer Experience: Behavior
In terms of identifying changes in how customers prefer to buy and then meeting those de-
mands, about half (49.6 percent) of survey respondents said they rely on salespeople to share
what they hear and see in the field but have no formal process, while 31.9 percent of respon-
dents said they survey customers on a regular basis.
How do you know how your customers prefer to buy from you?
How do you identify changes in customer desires and demands with regards
to how they buy from you?
They’ve told us
(through polls,
talked to sales-
people, etc.)
60.5%Analyzed data around
shopping behavior
16.8%
I don’t know
15.1%
Other
7.6%
Salespeople
share what they
hear and see,
but no formal
process
49.6%
Survey customers on regular
basis to gauge interests
31.9%
Salespeople enter data into CRM that
allows company to monitor changes
in the relationship
18.5%
Whitepaper: Digital Strategy in Distribution 7
© 2016 Gale Media, Inc.
Companies allocate money to digital or technology needs in a variety of ways, with most (31.2
percent) dedicating a specific amount to an overall IT budget each year, down from 34.8 percent
a year ago.
Slightly fewer companies (25.4 percent) report that they spend money on technology when an
individual makes a specific request, down from 29.4 percent in 2015, while 20.5 percent create a
minimum amount to spend each year and consider other technology expenditures as they arise,
up from 17.9 percent last year.
More companies (14.8 percent) reported that departments have a portion of their budgets allo-
cated, up from 11.4 percent in 2015.
Allocation of Technology Budget
Specific amount
allocated to
an overall IT
budget
31.2%
Individuals lobby
for products at
start of year
25.4%
Minimum amount set aside
and consider based on need
20.5%
Many departments have a portion
of their budget allocated
14.8%
Assign specific percentage of profits to
cover expected costs
8.2%
Whitepaper: Digital Strategy in Distribution 8
© 2016 Gale Media, Inc.
Close to half of survey respondents deem investing in technology staff important, with 43.4
percent saying they invest “significantly” because it’s a critical function in the company. Another
22.1 percent said they invest “some” – while staff plays a key role, most development focus and
investment is on other critical roles – and 23 percent said they invest minimally.
Technology Staff
The C-suite is dictating the technology decisions at most companies. More than one-third (34.1
percent) of survey respondents said those decisions are mandated from the top down with some
lower level input, while another 28.5 percent have a chief information officer or equivalent who
decides the company’s technology needs.
How much do you invest in your technology staff?
Who leads the technology decisions at your company?
Mandated from
the top down,
with some lower
level input
34.1%
We have a CIO
(or equivalent)
28.5%
Each department/group decides
what they need and when
18.7%
IT department drives conversation
and decision
14.6%
Mandated from the top down, with little
to no lower level input
4.1%
Significantly:
It’s a critical
function
43.4%
Minimal: They
provide a tactical
function rather
than strategic
23.0%
Some: They play a key role,
but most investment is on
other critical roles
22.1%
Shifting: As we move more apps to
the cloud, their role will be changing
7.4%
Other
4.1%
Whitepaper: Digital Strategy in Distribution 9
© 2016 Gale Media, Inc.
Most distributors plan to expand their investment in technology, and those plans are relatively
broad-based. E-commerce is the technology platform in which most respondents to the survey
(65.3 percent) said they are considering investing, followed by CRM at 44.9 percent; business
intelligence at 39.8 percent; mobile at 37.3 percent; and ERP at 36.4 percent.
Platforms for Investment
Other
WMS
Pricing
Product information
management
Marketing automation
solutions
ERP
Mobile
Business intelligence tools
CRM
E-commerce
7.6%
17.8%
21.2%
25.4%
32.2%
35.6%
36.4%
37.3%
39.8%
65.3%
In which platforms are you considering investment?
44.9%
EDI
Whitepaper: Digital Strategy in Distribution 10
© 2016 Gale Media, Inc.
About two-thirds (65.5 percent) of survey respondents said they use CRM (customer relationship
management) software. Other than their sales teams, 24.4 percent of survey respondents said
their customer service representatives use CRM, followed by multiple departments (23.1 per-
cent), executives (19.2 percent) and marketing (15.4 percent). A majority (58.2 percent) of survey
respondents said their CRM was integrated with their ERP systems.
CRM Usage
Finance
Customer support
Marketing
Branch managers
Executives
Multiple departments
1.3%
7.7%
9.0%
15.4%
19.2%
23.1%
Customer service 24.4%
Other than your sales team, who uses CRM in your company?
Integrated with ERP/other sources
to provide updated customer &
order information
Orders from online storefront
No integration, it’s a standalone
system
Lead capture forms on our website
No integration, it’s based in
spreadsheets with manual entry 3.8%
3.8%
15.2%
19.0%
58.2%
What level of integration exists with your CRM??
Whitepaper: Digital Strategy in Distribution 11
© 2016 Gale Media, Inc.
Survey respondents were equally divided about the types of new technologies that will have
an impact on their operations, with sensors on products (35.1 percent), sensors on equipment
(35.1 percent), image/video recognition (27.9 percent), GPS (25.2 percent) and 3-D printing (25.5
percent) all scoring equally high. More than a third (34.2 percent) of respondents don’t believe
any of these new technologies will impact their operations. Top concerns specifically about the
internet of things are cost/questionable ROI (24.3 percent), security/concerns about privacy (19.8
percent) and disintermediation (19.8 percent).
Impact of Technology
Do you think any of the following will have an impact on your operations?
Sensors on equipment
Sensors on products
GPS
None of these
Image/video recognition
(QR-codes)
3.6%
12.6%
25.2%
25.2%
27.9%
What concerns do you have about the internet of things in the supply chain?
Disintermediation
Security/concerns about privacy
Other
Usability
Don’t see a role for it 12.6%
16.2%
19.8%
19.8%
24.3%
7.2%
Cost/questionable ROI
Other
3D printing
Drones
34.2%
35.1%
35.1%
Whitepaper: Digital Strategy in Distribution 12
© 2016 Gale Media, Inc.
Although many distributors still lag in technology investments, they are moving in the right
direction. More now have a comprehensive digital strategy and most plan to invest, with a
growing emphasis on ensuring that they are meeting customer demands.
Distributors are showing an increased willingness to invest in solutions that can improve en-
gagement with their customers – including e-commerce, CRM (customer relationship man-
agement), business intelligence tools, mobile capabilities and market automation.
Two-thirds of survey respondents, about the same percentage as in last year’s survey, are
using CRM. Of those, 58.2 percent of companies have integrated their CRM with their ERP
platforms to provide updated customer/prospect and order information. Also among those
using CRM, many are ensuring that departments beyond the sales team, including customer
service, the executive team and marketing – or multiple departments, in many cases – have
access to it.
Although many distributors (32 percent) are still using email for order placement, which could
lead to errors, a majority are now looking to build robust online and mobile ordering capabil-
ities because they see that as the biggest growth area for their customers’ ordering needs.
One area where companies can improve is appointing someone to lead technology decisions
– where and how much to invest, as well as staffing an IT department with the right person-
nel. As more distributors move to cloud, the roles of their technology employees will change.
This will free up resources and help distributors become less tactical and more strategic with
their technology investments.
Another area is finding out how customers prefer to buy. With 15.1 percent of survey respon-
dents saying they don’t know and only 16.8 percent using analyzed data, companies have
room to better understand their customers’ preferences.
Those who meet the changing demands of an ever-increasing digital world by strategically
investing in technology will sharpen their customer focus and surge past their competitors.
Conclusion
Whitepaper: Digital Strategy in Distribution 13
© 2016 Gale Media, Inc.
About MDM
Designed for progress™
Infor® is committed to being the market leader in wholesale distribution enterprise business
applications. We build beautiful solutions with last mile functionality and scientific insights, and
provide our customers with what they need today and the innovation they’ll depend on tomor-
row.
Worldwide Headquarters
641 Avenue of the Americas
New York, NY 10011
Toll-free: 800.260.2640
Modern Distribution Management is the only specialized information business that provides
high-level in-depth resources to executives who are in or serve the wholesale distribution in-
dustry. With MDM’s information services, you’ll find fresh analysis, accurate reporting and good
ideas to practice across many lines of trade. We provide original, in-depth thinking - and you
won’t find MDM’s content anywhere else.
MDM’s editors have received several Editorial Excellence Awards from the Specialized Informa-
tion Publishers Association and are regularly recognized by industry groups as content leaders in
wholesale distribution.
2569 Park Lane, Suite 200
Lafayette, CO 80026
Phone: 303.443.5060
Toll-free: 888.742.5060
About Infor
