Impact Manufacturing

Original post by BCG&Co. affiliate BCG Systems, Inc.

By: Walt Hopkins

The distribution industry is facing changes. Many distributors recognize the need to achieve a smarter, more profitable organization. Here are, in my opinion, the top trends and issues in the industry today.

New Technologies: The internet, e-commerce, and electronic data interchange (EDI) have allowed distributors and their customers to better gather price data, track deliveries, obtain product information and market products. This technology trend will increasingly allow customers to purchase goods and track deliveries electronically. Customers frequently order and pay for goods in order to process fewer paper transactions.

Demand-Drive Supply Chains: Many businesses are relying on distributors to replenish shelf stock. Visibility from manufacturers through to customers is driving the need for order automation. A distributor must stock products from hundreds of suppliers facilitating the need for product information and electronic orders.

RFID: Radio frequency identification (RFID) technology is being used by larger wholesale distributors with warehouses. RFID allows distributors to track goods in stock and through transit to ensure delivery. Many smaller companies are looking at RFID to become more cost-effective in the marketplace.

Additional Services: Many distributors have started providing additional services to help increase margins and provide a competitive advantage. Some of these services include the financing of purchases, customer service and technical support, product marketing such as advertising and promotion, technical advice, and installation and repair services.

Going Green: Manufacturers, trade associations, and other entities are seizing the opportunity to help distributors go green, offering everything from green products to software that helps monitor environmental sustainability efforts. Companies are looking more to their overall operations and ways to distinguish themselves on environmental attributes that transcend their products.

Rising Costs: Costs are increasing, causing direct downward pressure on distribution margins. Distributors are looking for ways to manage costs and provide their customers with value. Many distributors are turning to private label goods to reduce the costs of their profits.

Channels: New distribution channels continue to grow, while existing channels are expanding with new approaches such as outsourcing, creating partnerships and utilizing new technologies. Companies need to implement more advanced business management solutions to cope with these changes.

Competitive Supplier Pricing: This is a must. Many distributors have issues with arriving at competitive price points with suppliers. Price points must be quantity sensitive. Requirements have to be communicated and forecasted.

Streamlined Business Operations: To run a cost-effective business, distributors need to automate critical business processes that will help minimize inventory levels and reduce waste.

Enhanced Supplier/Customer Relationships: Distributors live and die by the service levels they can provide. They must maintain excellent relationships with their customers and suppliers. A CRM system is a great tool to help achieve this.

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What new technologies are you using to succeed with these current trends and issues?

Interested in learning first-hand how you can achieve a smarter, more profitable organization? BCG Systems is launching a special event series for the distribution industry. This free series launches October 7th. Breakfast is provided at office locations. Get details and reserve your spot for BCG Systems’ Distribution Series today!