[Industry Report] Speed Wins: How Distributors Can Become Faster And Better

BROUGHT TO YOU BY: Today’s B2B distribution market demands speed— not only to compete, but to survive. Here’s how distributors can become faster and better. SPEED WINS D istributors have faced numerous challenges ever since the B2B distribution market has existed. Today, there are more challenges than ever. They include an often uphill battle to increase digital capabilities seen in the B2C world to match changing customer expectations; finding new and qualified talent to replace a generation of Baby Boomer staff that still comprise a large portion of executives and managers; they include the threat of suppliers bypassing distributors in the supply chain and selling direct to customers; and as always, competition from fellow distributors—large and small. Amidst all those foes, one factor has remained a powerful weapon for distributors: speed. The ones that progress against these challenges the fastest have a natural advantage. The distributors that can process orders; adapt to market and customer trends; and respond to customer needs quicker than their competitors stand to win repeat business and grow their reputation as the best solution provider available. This whitepaper will examine areas where distributors can become faster and the tools available to get there. Primarily, we’ll look at the following: • Data • Automation • Digitization • Using the Cloud Data “Big Data” has been a hot topic across all of manufacturing for more than a decade, resulting in distributors and suppliers employing numerous methods of harvesting as much business data as possible. In doing so, many overlook the data already organically available to them, as well as how to make sense of all that information. “They actually have most of this data right now — the problem is that the data is difficult to access. It’s essentially buried in their ERP system,” says Tony Corley, Senior Product Marketing Manager at business software solutions provider Epicor. “The problem is the toolset to access that data. They need a toolset where the people who need and use the data can actually go in and look at it on their own.” However, data itself is only useful when it’s relevant to business decisions. Sales and inventory data is important for salespeople, but it needs context. Data that presents a snapshot of a customer will only go so far. Much more useful is data that illustrates that customer’s past buying behavior, which can be used to forecast future behavior. 2 SPEED WINS “ ” “It’s not just looking at your data today, seeing a snapshot of sales or inventory. You need to see that in context and over time. Are metrics getting better or getting worse? ” — Tony Corley, Sr. Product Marketing Manager at Epicor “I’ve always thought having a clean, accurate item file or digital catalog is the first point,” Corley says. “If you have a good catalog, everything downstream is easier. It’s easier to find the right part and eliminates accounting errors. Digitizing your catalog will improve about seven to eight other processes.” In the warehouse, many distributors still have employees pick orders the old-fashioned way of walking around aisles with a piece of paper. Barcoding has revolutionized and streamlined this process. “Most vendors, if they’re not already offering barcoded product, probably will if you ask them,” Corley adds. “If you can streamline that process, everything downstream is better because no one picks a wrong product or takes a wrong count.” 3 SPEED WINS Automation When one thinks of automation in manufacturing, images of robotics and complex machinery often come to mind. But for most distributors, the area where automation is best applied is in back-office functions. Even with all the digital tools available to distributors today, many are still printing out emailed purchase orders and then manually entering those orders into a spreadsheet. This dated method not only uses a substantial amount of time and paper, but can easily result in a cluttered office and lost documents. It’s a natural business bottleneck. “All the order information and customer data is already there on an emailed PDF—why would you want to re-key that?” Corley says. In many cases, the data that distributor staff are manually entering into their operating software has already been manually entered by someone else in the supply chain. It’s a redundant task, considering the automation tools—like data capturing, order entry, document storage, audit trail and email alerts—available today across accounts payable functions. Digitization Digitizing a paper-based distributorship can be a painstaking task. And while many distributors have made great strides in adding digital tools—like enhancing their website and adding or upgrading eCommerce—other, more basic areas remain causes of slowdowns. A couple major areas are the product catalog—often the calling card of long-established distributors—and order picking. The Cloud The cloud becomes increasingly engrained in our everyday lives each year. Whether used for streaming media, storing photos or file-sharing, cloud-based functions are now a crucial function of our digital society. Distributors are just finding the tip of the iceberg when it comes to using the cloud for business functions. Serving as a virtual file server, the cloud enables distributors to offload much of the heavy lifting typically involved with manually operating their business software and allows them to take their business on-the-go. Having the ability to track business data and make adjustments in a mobile setting results in quicker decision-making and empowers outside salespeople by putting their business at their fingertips. Gaining Speed With ERP These key, speed-boosting tools—data, automation, digitization and the cloud—are strongpoints of modern ERP software. Yet, Industrial Distribution’s 2018 Survey of Distributor Operations showed that only 38 percent of respondents have an ERP system. A major factor in that percentage is many distributors running their business on the same homegrown software for more than a decade. Even if that software has since paid for itself and still performs the basic functions it did when it was first launched, the dark truth is that it may be dragging down the life of the business. Distribution tends to be a legacy- run industry, where executives are happy to coast on the mantra of ‘if it ain’t broke, don’t fix it,’ when it comes to business software. Those executives may be oblivious to speed their business can gain with modern ERP software. Unlike transaction-based legacy business software, today’s ERP gives unlimited access in a modern, open database environment that gives employees the ability to analyze data. And by providing real-time information, those employees can make better decisions to improve customer service. ERP software’s automation of mundane order-entry tasks gives employees more time to focus on customers, and those customers will see faster responses and more accurate service. Modern systems offer key modules such as volume rebate tracking, customer-facing order entry, front counter capabilities, document imaging, assembly/ disassembly modifications and job-based pricing. Customers rely on distributors for services now more than ever, and distributors have responded by boosting their service offering as a way of differentiating from each other and deepening relationships. At Epicor, its popular Prophet 21® software has expanded with its distribution customers, integrating CRM functionality and manufacturing modules for kitting and assembly, as well as service and repair. “That line is being blurred between what a distributor is and what a manufacturer is,” Corley says. “We’ve done a lot of work in these past few years to improve our value added functionality, like manufacturing, third party processing, and service and repair. As distributors have expanded and offered more to their customers, so have we.” Distributors can work with leading ERP providers to find the best-fit solution for them—whether that means on- premises or cloud-based, as well as an all-in-one solution or just once facet. No matter what route they choose, ERP software has long proven to inject speed into distributors’ business, allowing them to compete better in today’s rapidly evolving marketplace. “We’re fit for distribution. That’s what we focus on, that’s what do.” Corley says of Epicor. “Customers get an out-of- the-box solution that is easy to install, easy to train, easy to use. That allows our customers to grow their business.” 4 SPEED WINS About Epicor Epicor Software Corporation (www.epicor.com) provides industry- specific business software designed to fit our customers and how they work. Epicor’s nearly 50 years of experience with its customers’ unique business processes and operational requirements is built into every solution so that distribution businesses can scale, adapt and grow without costly system modifications—in the cloud or on-premises. About This Report The information in this report was researched and produced by Industrial Distribution in conjunction with Epicor. Statistical data was researched and compiled by Advantage Business Marketing in May 2018.