Traditionally, wholesale distributors have acted as intermediaries between suppliers and customers. The basic business model of warehousing products is no longer sufficient given the blurring of the lines brought about by online purchasing, so distributors now must reinvent their businesses. This requires both new technology and fresh thinking in management approaches.
"Best-run" wholesale distributors leverage technology and empower employees to focus on-value tasks, improved decision-making, and the ability to move opportunistically into adjacent market” notes a recent IDC report, Becoming a Best-Run Midsize Wholesale Distributor
Attracting top talent for inventory management and relationship management is an urgent need for many distributors today. This requires modernizing operations and creating a positive work environment with easy-to-use tools, employee collaboration, and a minimum of mindless tasks.
At the same time, developing innovative business models requires the best of current and future technology. Many wholesale distributors run their operations with aging or patched-together systems that served the industry in the past but now limit innovation and changing business models.
Specifically, legacy IT systems cage data in system silos that reduce informational use and overall operational visibility and hinder real-time operations. Aging IT systems also limit the opportunities for taking advantage of advanced automation and new technologies such as artificial intelligence. An old software system will discourage the top talent needed for innovation from joining firms, too.
How Top Distributors are Handling Modernization
Wholesale distributors are addressing the changing distribution landscape in a variety of ways, but three clear priori- ties emerge for distributors that are considered the best run.
Improving productivity. Roughly 39 percent of the best-run wholesale distributors consider productivity improvements a key business priority, according to IDC research. Among all wholesale distributors, only 28 percent consider it important.
Adding new revenue streams. A second top priority right now for the most successful wholesale distributors is adding additional revenue streams to combat the chipping away of traditional lines of business. IDC research has found that 38 percent of the best-run wholesale distributors are focusing on the development of new revenue streams, compared with only 24 percent overall and 20 percent of the wholesale distributors that are lagging behind.
Transforming the business. The most significant difference between best-run wholesale distributors and the competition is a focus on overall business transformation from management to ground-floor operations. IDC found that 34 percent of wholesale distributors that are considered best-run believe business transformation a top priority, compared with only 23 percent of wholesale distributors overall and 10 percent among the businesses that are lagging behind.