Delivering for Best-in-Class Wholesaler-Distributors
April 19, 2017  |  ByMark Dancer, NAW Institute for Distribution Excellence Fellow
NAW-What Manufacturers Say About Digital Tools-Distributors in the Digital Era #12

For suppliers, channel management is about designing programs and partnering policies that create a two-way exchange of values, not just with customers, but with their best distributors. More and more, manufacturers use digital tools to turbocharge these efforts. If your best suppliers are not talking with your business about how to leverage digital tools for mutual benefit, that probably doesn’t mean that they aren’t making plans. They just aren’t making them with you. That’s a problem.

 

While conducting research for Becoming a Digital Distributor: Strategies and Tools That Create Value, we asked manufacturers about the benefits they expected to achieve through the use of digital tools—used by themselves and by their distributor partners. We’ve included some of those findings in this blog post so you can decide if they sound familiar. You should be hearing similar things from your best suppliers. If you aren’t, then you can use these findings to jump-start your conversations.

What Manufacturers Told Us About Digital Tools

Overall, manufacturers see many positive benefits for using digital tools, and like many wholesaler-distributors, there is also a sense of undeniable evolution: Digital tools will play a larger role in the manufacturer business model and value chain for serving customers. A few comments shared by two suppliers make the case:

“Benefits from digital tools include increased exposure of our products in various markets and distribution channels, enhanced customer experience, and increased sales.”

“Digital tools will drive brand awareness in the channel, create multiple touchpoints for monitoring results, provide direct feedback for new products and services, and help us improve sales force productivity.”

As we pushed these conversations further, we found plans for digital tools that reflected both the traditional strengths and weaknesses of distributor partnerships around six essential factors for success:

  1. Understanding. Manufacturers are at an arm’s length from customers when they sell through wholesaler-distributors. So, it is not a coincidence that suppliers are hoping that digital tools will enable them to have fact-based and real-time knowledge of customers. Often, benefits around increased customer understanding are linked with other benefits that flow from that knowledge. The president of one manufacturer explained, “Digital tools will increase the velocity of customer insights and our knowledge of unmet needs.”
  2. Education. Suppliers have picked up on the capability of digital tools to help customers (and wholesaler-distributors) gain knowledge. Digital tools are becoming the way we learn, as individuals and as businesses. Suppliers want to use digital tools to help customers (and their distributors) learn about their products, brands, strengths, and abilities. A salient quote from one supplier was, “Our biggest benefit from digital tools is to become an educator for our customers and potential customers. We want to be the go-to supplier for our markets. Customers will come to us knowing they are getting top-notch information, products, and customer service.”
  3. Reach. Suppliers are looking to digital tools to expand their reach. It is important that this does not necessarily mean taking business direct and cutting out wholesaler-distributors. In fact, none of the manufacturers in our online survey cited this as a goal. The outcomes manufacturers seek include improved customer experience, enhanced loyalty, acquisition of new customers and relationships, improved higher productivity gains, and access to new markets. As an individual with responsibility for implementing CRM explained, “Digital tools will increase consumer reach since consumers are already in the digital world. They will link our products to consumer preferences and needs, and help us connect with consumers at an emotional level. Digital tools will lower costs, because once a consumer is in our database, we can mine that relationship long term.”
  4. Visibility. Manufacturers want digital tools to help them gain data that go to the productivity of the supply chain and effectiveness of salespeople, both their own salespeople and their distributors’ salespeople. While distributors often resist sharing information, in some industries, the sharing of point-of-sales data has been common for many years. While manufacturers often provide financial incentives for distributors to share data, the lasting benefits are the growth in sales, share, and productivity that can flow from analyzing and acting on the data. A succinct supplier quote makes the case: “We want to build a better idea of inventory and sales through digital tools.”
  5. Execution. All is for naught if the adoption of digital tools does not result in new behaviors and improved business results. Manufacturers that sell through distributors often feel powerless, or at least ineffectual, in coordinating activities that are critical for execution of their business strategies. Digital tools hold the promise of creating information that can help manage execution for wholesaler-distributors and suppliers, and for mutual benefits through improved collaboration. As one sales manager explained, “We must recoup the costs of our sales and marketing efforts, improve our customer experience, and demand more accountability for trade discounts.”
  6. Competitiveness. Manufacturers hope the benefits of digital tools will lead to improved competitiveness in response to forces of globalization, new technologies and products, aggressive customer-buying behaviors, and the emergence of new channels and disruptors. A typical comment from manufacturers was, “Digital tools will help reduce the cost of paying salespeople when using e-commerce platforms and help tailor our sales efforts to our customers’ time schedules.”

Use Free Online Tools to Upgrade Your Partnerships

In Getting Results From Your Digital Investments, we outlined a process to help you strengthen your vision for using digital tools to better serve your customers and improve your business results. We provided six free online tools at the end of each chapter to help you quickly get started in executing our recommendations. One tool was a supplier survey to help you gather insights around their channel strategy and use of digital tools. Email this survey to your best suppliers or use it as a discussion guide for your face-to-face meetings. Either way, it as a good start to make sure you’re aligned with your best suppliers and working to upgrade your partnerships using digital tools.

Have you downloaded the Pocket Guide about this important study yet?
Click on the image to receive some valuable excerpts from the full study.

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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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