Digital transformation for distributors: 7 ways to get started

Ask yourself: If I was our customer, what could my distributor do to make my life easier? To help you differentiate your business and put you on the path to creating deeper, more service-oriented relationships with your customers, we have written a paper that explores seven ways distributors can start their digital transformation.

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Distribution Digital transformation for distributors: 7 ways to get started In this increasingly competitive environment, it’s more important than ever for wholesale distributors to evolve and adapt—lest they get left behind. It’s no longer enough to just understand your customers’ specific needs. You need to have the flexibility to adjust your business practices to meet those needs. And it’s not about offering the lowest prices. Instead, it’s about finding ways to differentiate your business in order to build customer loyalty and continue to grow. Combine this with finding ways to achieve global reach and streamlining your business practices to increase your margins, and you have the keys to survival and growth. To meet these challenges, wholesale distributors need to take advantage of opportunities for digital transformation. Digital transformation can help jump start growth and put distributors on the path to creating deeper, more service-oriented relationships with their customers. In this paper, we’ll explore seven ways distributors can start their digital transformation. Each of these ways offers a chance for distributors to rethink the way they do business and adopt new, disruptive technologies and approaches to staying ahead of the competition. 2Distribution Industry Perspectives Start thinking differently Digital transformation starts with a new approach to business. A report from Constellation Research says “Digital transformation begins with design thinking, a methodology that unlocks solutions to questions that have not been asked before.”1 Design thinking involves putting yourself into your customers’ shoes. Ask yourself: If I was our customer, what services would I want that I’m not getting? What could my distributor do to make my life easier? Then, consider what you’ll need to do to meet those needs. That’s likely going to entail changing up your internal business processes, improving your existing services, adding new services, and introducing new ways for your customers to do business with you. And, it’s going to entail adopting new, disruptive technologies that take advantage of big data, advanced analytics, omni-channel commerce, social, mobile, Internet of Things (IoT), and more. As customer behaviors and needs change, you must have the flexibility to adjust your business practices in order to meet those changes. You need to embrace innovative technologies that help you to optimize your daily operations and hone your competitive edge. It’s not just about offering the lowest prices. Now, to succeed, you need to find ways to add layers of service that differentiate your business and help build customer loyalty. Let’s look at seven ways you can start building this differentiation through digital transformation, and the technologies that will help you accomplish your goal. 1. Embrace value-added services “Service” now means so much more than what once constituted good customer service. It may mean eliminating an onerous task for your customers, anticipating their needs, managing a process for them from beginning to end, or streamlining your interactions with them. That service may be something you deliver directly to the customer, or in some cases by enabling your customers to serve their customers more effectively. One way to accomplish this is to branch out from a pure distribution model by adding additional services, like light manufacturing, kitting, assembly, toolcrib management, rental, or aftermarket services. Think about partnering with your best customers, so you can anticipate their needs. Perhaps you could replenish the inventory in your customer’s warehouse without them even having to place an order. That’s the idea behind distributor-managed inventory, a practice that forward-thinking distributors are using to differentiate themselves and forge closer bonds with their most valuable customers. Functioning more like an ever-present, intelligent partner, you can manage and replace materials in your customer’s toolcrib, industrial vending machines, repair supplies, and operations inventory. 3Distribution Industry Perspectives You can manage replenishment behind the scenes, so your customer, always has what they need, when they need it—without having to place an order. Constellation Research suggests that bundling additional services can drive scalable growth and healthy margins.2 To meet this increasing customer demand for more comprehensive services will require technologies like artificial intelligence, advanced analytics, cloud, mobile, and IoT. 2. Improve the customer experience According to Constellation Research, “Organizations are moving from products to services, services to experiences, experiences to insights, insights to brand promises.”3 Distributors need to make sure they’re following that same progression. It’s becoming increasingly important that you match customer intelligence with your own unique market differentiators. That starts with building a positive customer experience—from beginning to end. It comes right back to understanding what your customers want and need and how they prefer to interact with you. Chances are, they’re accustomed to omni-channel commerce opportunities, which allow them to do business anytime, from anywhere. You need to give them the tools to do business the way they prefer, whether that means through an Internet portal, via text, from their mobile phones, in person, or on the phone. You’ll want to look for a customer experience suite that helps you integrate customer data across your enterprise, so you can accelerate customer engagement and drive profitability. Key applications here include customer relationship management (CRM), configure price quote (CPQ), contract lifecycle management (CLM), and eCommerce. 3. Fine tune supply and demand forecasting Inventory is your biggest asset, and managing it effectively is the key to increasing profitability, as well as creating happy customers. Start by streamlining your inventory management processes to reduce costs associated with freight, transactions, and errors. According to inventory management thought leader Grant Howard, a process known as advanced inventory management (AIM) can help here. AIM uses data-driven technology to provide more comprehensive inventory management that drives fill rates, turns, and better profits, with less work.4 Constellation Research believes that in the not-too-distant future, 60% of mission-critical data will reside outside of existing systems and be accessed, not owned.5 To effectively utilize that data, you’ll need sophisticated analytics, artificial intelligence, cloud, IoT, and mobile technology, in addition to sophisticated tools for purchasing demand, and inventory management. 4Distribution Industry Perspectives 4. Explore onshoring An increasing number of manufacturers are looking to bring more of their operations back to the US, a trend known as onshoring. This creates a huge opportunity for distributors to smooth the transition for their manufacturing partners. For many distributors, this will mean providing space, equipment, and trained talent for returning manufacturers. In addition, onshoring allows distributors to respond more quickly to their customers’ demands, make more accurate forecasts, maintain more accurate stock levels, and decrease transit times—all of which can help increase customer satisfaction. Distributors who have invested in a modern, integrated ERP system with advanced analytics capabilities, as well as sophisticated supply, demand, and inventory tools, will be best positioned to take advantage of this opportunity. Constellation Research also believes that additive manufacturing (such as 3D printing), artificial intelligence, automation and robotics, big data, blockchain, cloud, IoT, and mobile will play a key role in making onshoring feasible and profitable.6 5. Maximize equipment value Sometimes, transforming your business is more about saving money than making it. That’s where maximizing the value of your capital equipment comes in. If you haven’t already adopted a rigorous preventive maintenance program, now’s the time to start. When you can predict equipment reliability problems, you can prevent downtime from happening. You’ll also be able to reduce inventory and purchasing costs and collect on warranty-related claims. With preventive maintenance and strategic asset planning, you can better manage equipment to meet your corporate performance goals. The technologies you’ll want to watch here are enterprise asset management solutions that integrate with your ERP system. Ruby CMYK: 10, 100, 100, 2 CMYK Color Palette Graphite CMYK: 25, 18, 12, 55 Coral CMYK: 0, 65, 100, 0 Amber CMYK: 0, 38, 100, 0 Citrine CMYK: 2, 10, 100, 0 Jade CMYK: 42, 0, 100, 0 Emerald CMYK: 60, 0, 95, 0 Ruby Light: 10, 100, 100, 2 Dark: 10, 100, 100, 22 Graphite Light: 25, 18, 12, 55 Dark: 25, 18, 12, 75 Coral Light: 0, 65, 100, 0 Dark: 0, 65, 100, 20 Amber Light: 0, 38, 100, 0 Dark: 0, 65, 100, 0 Citrine Light: 2, 10, 100, 0 Dark: 0, 38, 100, 0 Jade Light: 42, 0, 100, 0 Dark: 60, 0, 95, 0 Emerald Light: 60, 0, 95, 0 Dark: 65, 0, 100, 20 Turquoise Light: 71, 0, 48, 0 Dark: 71, 0, 48, 20 Topaz Light: 61, 0, 0, 0 Dark: 75, 20, 0, 0 Azure Light: 75, 20, 0, 0 Dark: 95, 45, 0, 0 Cobalt Light: 95, 45, 0, 0 Dark: 87, 70, 0, 0 Sapphire Light: 87, 70, 0, 0 Dark: 87, 70, 0, 20 Amethyst Light: 67, 90, 0, 0 Dark: 67, 90, 0, 20 Tourmaline Light: 4, 94, 46, 0 Dark: 4, 94, 46, 20 Turquoise CMYK: 71, 0, 48, 0 Topaz CMYK: 61, 0, 0, 0 Azure CMYK: 75, 20, 0, 0 Cobalt CMYK: 95, 45, 0, 0 Sapphire CMYK: 87, 70, 0, 0 Amethyst CMYK: 67, 90, 0, 0 Tourmaline CMYK: 4, 94, 46, 0 5Distribution Industry Perspectives 6. Streamline the collections process To transform your finance process, start by increasing cash flow. Sure, it seems obvious, but it can be tougher to implement than you’d expect. Do a statistical analysis of customer segments and non-standard processes. Analysis often shows that non-standardized collections, dispute management, and accounts receivable terms can lead to cash being stuck in limbo. Constellation Research suggests that you focus on reducing days sales outstanding (DSO), improving credit management, reducing write-offs in dispute management, and shortening billing cycles to increase cash flow.7 Choose integrated financial management tools that seamlessly connect your front and back office to help ensure you have clear visibility into your profitability and growth. 7. Go for anytime, anywhere business Your workers and your customers are always on the move. Make it easy for them to do business from wherever they’re located, whenever the need arises. Whether it’s a sales rep who needs to update orders in real time, a customer who wants to track an order, or a procurement specialist who needs to modify a PO on the fly, integrating mobile devices with your core software can help you work smarter and faster than your competitors. Give your employees full-time access to core business applications to reduce down time and allow them to better serve customers. Give your customers self-service options, so they can find information, track orders, configure products, ask questions, and run their own businesses more efficiently. When you mobile-enable every part of your organization, you create a true omni-channel experience that empowers your workers to better serve your customers. Ruby CMYK: 10, 100, 100, 2 CMYK Color Pale te Graphite CMYK: 25, 18, 12, 55 Coral CMYK: 0, 65, 100, 0 Amber CMYK: 0, 38, 100, 0 Citrine CMYK: 2, 10, 100, 0 Jade CMYK: 42, 0, 100, 0 Emerald CMYK: 60, 0, 95, 0 Ruby Light: 10, 100, 100, 2 Dark: 10, 100, 100, 22 Graphite Light: 25, 18, 12, 55 Dark: 25, 18, 12, 75 Coral Light: 0, 65, 100, 0 Dark: 0, 65, 100, 20 Amber Light: 0, 38, 100, 0 Dark: 0, 65, 100, 0 Citrine Light: 2, 10, 100, 0 Dark: 0, 38, 100, 0 Jade Light: 42, 0, 100, 0 Dark: 60, 0, 95, 0 Emerald Light: 60, 0, 95, 0 Dark: 65, 0, 100, 20 Turquoise Light: 71, 0, 48, 0 Dark: 71, 0, 48, 20 Topaz Light: 61, 0, 0, 0 Dark: 75, 20, 0, 0 Azure Light: 75, 20, 0, 0 Dark: 95, 45, 0, 0 Cobalt Light: 95, 45, 0, 0 Dark: 87, 70, 0, 0 Sapphire Light: 87, 70, 0, 0 Dark: 87, 70, 0, 20 Amethyst Light: 67, 90, 0, 0 Dark: 67, 90, 0, 20 Tourmaline Light: 4, 94, 46, 0 Dark: 4, 94, 46, 20 Turquoise CMYK: 71, 0, 48, 0 Topaz CMYK: 61, 0, 0, 0 Azure CMYK: 75, 20, 0, 0 Cobalt CMYK: 95, 45, 0, 0 Sapphire CMYK: 87, 70, 0, 0 Amethyst CMYK: 67, 90, 0, 0 Tourmaline CMYK: 4, 94, 46, 0 1. Constellation Research, Nine Starting Points for Digital Transformation in Manufacturing, May 10, 2017, pg. 7. 2. Constellation Research, page 7. 3. Constellation Research, page 7. 4. Grant Howard, “Advanced Inventory Management: 10 Steps to Success”. 5. Constellation Research, page 9. 6. Constellation Research, page 10. 7. Constellation Research, page 11. Concluding thoughts; why the urgency Learn more about making a digital transformation Copyright ©2017 Infor. All rights reserved. The word and design marks set forth herein are trademarks and/or registered trademarks of Infor and/or related affiliates and subsidiaries. All other trademarks listed herein are the property of their respective owners. www.infor.com. 641 Avenue of the Americas, New York, NY 10011 Follow us :    INF-1775295-en-US-0817-1 In today’s marketplace, technology simply can’t be an afterthought. It must be a part of the company’s overall strategy. Digital transformation is impacting businesses of every kind, size, and location. The distribution industry is no exception. Muddling along with legacy software, manual systems, and outdated tools is a direct route to obsolescence. Distributors now have the opportunity to jump-start growth. They can leverage modern technology in order to better align with customers and optimize the supply chain. End-to-end visibility throughout the organization—and to the extended value chain—provides one of the most significant opportunities. Extending this connectivity further to include the customer also helps to align with the market and build value and loyalty. Now is the time to plan a modernization strategy which ties together all seven of the entry points listed in this paper. A comprehensive plan will ensure that the various components are compatible and contribute to the high level objectives and priorities. With system-wide modernization in place, the organization can embark on building new customer-centric revenue streams, adding service offerings, and turning data into tools for growth and customer alignment. It is a new era for the distribution industry. Companies can embrace digital tactics or be left on the sidelines as the competition rushes past.