Distributors Are Innovating, But Are Manufacturers Paying Attention? – Distributors in the Digital Era #83
Distributors are a strategic go-to-market asset for manufacturers and many are stepping up to reinvent the traditional distribution business model for the digital age. My recent conversations with manufacturers indicate that many suppliers have not noticed, and very few have actively engaged with, even their most influential distributor partners. The partnership between distributors and manufacturers remains as crucial as ever, but it will die without proactive collaboration around emerging innovation opportunities.
At a minimum, a lack of attention means that opportunities for jointly leading customers forward through the COVID-19 pandemic are being missed. This crisis is a “make or break” challenge for every company’s brand, including manufacturers and distributors. Customers know that the value chain delivers benefits from both and they will place the blame on both if distributors and suppliers don’t step up to help. But for suppliers, a lack of attention may be disastrous because distributor partners offer unique opportunities to offset supplier risk in disrupted markets. Maintaining the customer-perceived value gained by the incumbent value chain is essential for mitigating the extreme power of virtual market platform businesses.
Moreover, B2B brands are built on real-world experiences with products. Virtual markets can’t strengthen any manufacturer’s brand. Distributors can be a powerful partner for protecting manufacturers because distributors have an army of feet-on-the-street people working with customers through direct human-to-human interactions to solve customer problems and to help customers prepare for the future of business.
Distributors are responding to the COVID-19 pandemic as local businesses thoroughly committed to helping customers survive the crisis. Social distancing requirements are “locking in” customer preferences toward online ordering, virtual shopping support and fewer in-person meetings. Distributor innovations respond to these trends as well as to opportunities to transform the distributor business model to become a demand-generating business.
This transformation is about two new capabilities: mining data and applying artificial intelligence, and becoming masters of customer experiences. Recent posts on the NAW Blog Distributing Ideas explored innovating during the crisis on topics including leveraging AI, strategies for creating value, the need for virtual and human customer experiences, unbundling sales roles while investing in new demand-creating activities, and the role of distributors in offsetting global supply chain risk. All of these innovations have benefits for strengthening the traditional manufacturer/distributor partnership.
In Innovate to Dominate: The 12th Edition in the Facing the Forces of Change® Series, we provide 51 distributor stories that go to the heart of their innovation initiatives. In our research, we asked distributors what is holding them back from going further, then sought out innovative ideas and solutions from thought leaders and companies with disruptive services. Through brainstorming with distributors, we identified, explored and detailed many future business innovations that go to competing in the virtual business place, revitalizing the value chain and adding human-centric innovations to technology-driven change.
Specific ideas shared in Innovate to Dominate go to reinventing the traditional manufacturer/distributor partnership around data collaboration, upgrading value chain experiences as a counteroffer to virtual marketplaces for customers, strengthening B2B brands by working with customers where they work and live, helping customers adopt analytics and artificial intelligence through collaborative initiatives and more. For manufacturers, the distributors’ stories and game-changing innovation represent insights about the changes driven by leading distributors and provide an opportunity to kick-start collaborations with their distributor partners.
Distributors can build awareness and kick-start conversations with manufacturers around collaborating on innovations by taking the lead. Three ideas have surfaced in my recent conversations with distributor leaders:
- Start an innovation task force and include your best (or most promising) suppliers. Focus the task force on exploring end-customer innovation opportunities, then work back to identifying partnering opportunities.
- Suggest changes to your supplier’s authorizations, distributor compensation and marketing programs. Changes should focus on new capabilities around creating customer experiences, strengthening brands and creating demand.
- Provide copies of Innovate to Dominate to your suppliers who are most willing to participate in exploring collaborative innovations. Use the distributor stories, innovation opportunities and recommended processes as a foundation for working with your suppliers.
If you are a manufacturer reading this column, I am interested in hearing about your progress working with your distributors to innovate customer experiences and revitalize the value chain. If you are a distributor, I am interested in learning about your experiences working with manufacturers and your ideas for updating the traditional supplier/distributor partnerships. Feel free to reach out or schedule a call at any time.
As a Fellow for the NAW Institute for Distribution Excellence, I am committed to helping distributors come out of the Coronavirus crisis stronger than before and to leading customers and suppliers to the future. To help with this endeavor, Innovate to Dominate is a roadmap for innovation by distributors. More than a report on trends, it is a foundation for advancing distributor leadership with customers and for revitalizing the value chain.