Delivering for Best-in-Class Wholesaler-Distributors
July 19, 2018  |  ByMark Dancer, NAW Institute for Distribution Excellence Fellow

A fundamental shift is underway in what it means to be a distributor and the core strengths required to compete with excellence. Traditionally, distributors competed on operational excellence — managing inventory, taking orders and delivering products. Distributors focused on the back end of their business. Operational excellence remains very important, but the greatest opportunity for improving performance has shifted rapidly to the front end — managing sales, support and service activities that are delivered through different channels.

Distributors serve customers through multiple channels that may include field and inside sales, field and inside technical support, customer service and inside sales. Distributors continue to operate brick-and-mortar branch locations while also adding webstores, social media, configurators, mobile devices and sales through online marketplaces. It is very likely that customers will interact with all channels in different ways over time according to their needs for particular purchases. Managing all of these channels is a complicated process that requires careful planning and execution if a distributor is to deliver a consistent and competitive customer experience.

All of this is often captured in omnichannel strategies and initiatives. As a term and trend, “omnichannel” can mean different things to different distributors. But at its core, omnichannel is about applying the discipline and practice of channel design, restructure, optimization and ongoing management of a distributor’s channels. These methods are not a traditional competency for distributors, but mastery of them is becoming increasingly important for distributors to remain competitive.

These five key elements are emerging as the foundation for omnichannel excellence and should be executed by distributors:

  • Define how your services are differentiated. Customer experiences are delivered through services that are common across all distributors and include helping customers make decisions, taking orders, delivering products and driving business results. Careful planning is required to offer services differentiated by capabilities, performance or customer experience. Manufacturers differentiate their products on physical features and benefits. Distributors can do the same, but services are often defined by intangibles. That makes differentiation difficult, but still essential.
  • Allocate customer activities. Once differentiated services are defined, distributors can create an inventory of critical activities performed for customers across presale, transaction and postsale phases, with differences noted by customer segments. Activities are then mapped to field, inside and digital channels. Accounts may be aligned with one channel or shared across two or more. Customer activities assigned to a channel point to required capabilities, processes, rewards and metrics.
  • Innovate brick-and-mortar facilities. Online shopping and disruptive online marketplaces have negated the traditional value offered by brick-and-mortar facilities. Customers no longer expect to place orders with a local business and receive deliveries from a nearby warehouse. Innovating brick-and-mortar facilities is not about shinnying down to remaining roles. It’s about offering new experiences that can’t be offered online. Retailers are currently working through this challenge. Distributors must do the same.
  • Achieve breakthrough value chain efficiencies. While individual distributors may be able to eke out yet another round of cost reduction and profitability enhancements, collaborating with suppliers to better manage combined inventories and logistics will offer the opportunity to address untapped gains. Success requires mutual real-time visibility, advanced analytics and new supplier incentives.
  • Redefine business processes and culture. The days of hiring tenured salespeople and leaving them to make their own decisions for serving customers on their own without guidance are over. Rather, omnichannel strategies require a high degree of collaboration and precision. Customer experiences are improved, but the many moving parts of an omnichannel strategy will not function without well-defined business processes, attentive first-line management and a culture focused obsessively on customer excellence, continual improvement and innovation.

Distributors are making rapid progress on designing and managing omnichannel strategies, but much work remains. If your omnichannel strategy is based on other plans or if you are struggling to get started, please reach out to me at mark.dancer@network4channelinnovation.com.

And, if you haven’t yet participated in the survey for the next Facing the Forces of Change® wholesale distribution trends study, a continuing project that has charted the most important industry trends since 1982, we need your help! The survey will close at the end of this month so please participate and help us make this latest Facing the Forces of Change® report the most reliable, helpful and accurate one ever. Your insight will help shape this important report. Please use this survey link and thanks in advance for your participation: https://www.surveymonkey.com/r/TM6PFZR

Also read this blog: Digital Commerce – Wholesale Distribution Trends #7

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