Delivering for Best-in-Class Wholesaler-Distributors
June 3, 2016  |  ByMark Dancer, NAW Institute for Distribution Excellence Fellow
NAW-3-Step Process for Developing a Value Strategy

Here’s a three-step process for developing a value strategy for leveraging information, improving productivity, and positively affecting a wholesaler-distributor’s business results.

Step 1: Define Your Core Value

Our interviews with wholesaler-distributors revealed fundamental decisions around the range of solutions offered to customers (supply-focused vs. business-wide) and productivity or relationship tradeoff s (transactions vs. interactions). It’s important to note that core value decisions are not black and white; most distributors will aim for a spot on a continuum between extremes, and the value delivered to any one account, or a single account over time, will occupy differing places on the core value matrix. Still, it is important to start with a definition of the core value for designing an effective business model for differentiating competitors. Vision requires choice.

Step 2: Refresh and Refine Your Business Model

New value strategies, enabled by digitals, are the heart of today’s wholesaler-distributor business models. Distributors are moving toward information-based value and away from value defined solely by adding value to stocked products. Decisions around channels, solutions, people, assets, and processes are made to deliver value to customers and suppliers and compete with disruptors and conventional distributors. Financial results are defined by new and existing revenue streams, efficiently managed costs, and the gross and net margins that are proportional to created value.

Step 3: Consider Your Return-on-Investment

All investments require a return, and digital tools are no exception. It’s important to note, however, that the adoption and use of digital tools is a learning process, and it is impossible to accurately and completely estimate the value created for a wholesaler-distributor through the use of digital tools. After many conversations with distributors, we recommend that specific measures and goals be set at the start of adopting and using digital tools and that these assumptions be routinely updated as experience is gained. Each distributor will need to set its own tolerance for risk and return and for moving ahead in front of other distributors in its line of trade or following as the uses and outcomes become better known.

Thus, our process for gaining a business impact for wholesaler-distributors is recommended as a three-step, iterative process. In later chapters after we have added additional value chain impacts, we will update this process so that you can achieve the best possible outcomes for your own business and, if desired, can obtain further gains by acting as a leader in the value chain through a disciplined and creative process of business model innovation.

Adapted from Becoming a Digital Distributor: Strategies and Tools That Create Value

The full study shares data, analyses, tools, recommendations, and more than 250 direct quotes from distributors who provide expert advice for creating a vision and driving your wholesale distribution business forward.

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Mark Dancer, NAW Institute for Distribution Excellence Fellow

Mark Dancer, NAW Institute for Distribution Excellence Fellow

Mark Dancer founded the Network for Business Innovation to drive awareness, advocacy and excellence for B2B innovation, and to enable an exchange of ideas between leaders on business transformation, technology adoption, social impact and community engagement. For more than 30 years, Mark has worked with leading companies to achieve go-to-market excellence across a wide range of industries in developed and emerging markets.

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