Infor
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
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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.
