Whether your customer is in-house or in another state, data and automation can make you a better supplier.
Today, distributors and other service providers have an array of new tools and technologies at their fingertips, which, when leveraged properly, greatly heighten their ability to serve customers. These resources sometimes seem more applicable to B2C companies—not B2B—so they are not routinely discussed and are largely missed. Yet, those who do not connect the relevance are missing a tremendous, if not crucial, opportunity. To provide context and a deeper understanding, let’s go back to where it all begins.
For many industrial distribution and service companies, the journey starts as a result of two major inventions of the 1800s: electricity and telecommunications. The former freed industrial output from human labor and the latter unbuckled operations to work even closer to raw materials and end users. While there have been other significant innovations along the way, nothing of that magnitude has created the same amount of opportunity or disruption.
For decades, what followed was an evolutionary process by which industrial products were invented and distribution/service companies were created. New and existing companies flourished, while those that refused to acknowledge the times met their demise. For traditional organizations, competition sometimes came from unfamiliar places and companies. The level of business activity must have been exhilarating, and I would have loved to have been in business during those years.
Fast-forward to 2015. From my estimation, it was about this time that industrial distribution began to experience accelerated change. Yet, it was subtle to the point of nearly being undetectable. What happened? Customers began to expect the same type of service at work that they received at home. In other words, they expected to place an order with their thumbs and have the product show up on their docks, quickly, in good condition, with no discrepancies.
The point of contrasting revolutionary times that are decades apart and somewhat dissimilar is that, in both cases, the outcomes are the same. Simply put, organizations needed to adjust—and fast. If not, they faced declining revenues and near-certain failure.
Transforming a very traditional business model can be tricky, and the financial investments required for new tools and talent are concerning enough. Changing a company’s ethos and leadership mindsets can feel nearly impossible at times. However, there is great news for those who decide to take the plunge. Tools and talent exist to meet customers’ growing needs, and it is not too late to get started.
The relationship is rooted in the idea that the provider understands the parts and/or services better than the end user. They also understand the customer’s plants and applications better than the manufacturer of the part being sold. The effectiveness of the link in between is what often separates good suppliers from bad. This has existed since the 1920s, when distributors became established. Relationships were built on the foundation that servicing the customer meant being with them on the ground and understanding their needs to become part of the customer’s team. This understanding was the basis for the distributor to have the right part, at the right place, at the right time. That will never change. It’s the reason for these companies to exist.
A winning formula
So, how do you improve upon an age-old winning formula? What’s available now that wasn’t available before? Plenty! Chief among them is data, or the much-improved process for data analysis and output. Data is now being used to more accurately predict placement of the right inventory at the right location, at the right time, and from the right brands. The same form of data helps to apply geo-mapping to establish service centers in the right locations. Data assures that delivery vehicles are organized using the most expeditious routes. Similar data analysis and routines also exist to maximize procurement, operations, and marketing.
Then there’s automation. Just as electricity freed factory production in the late 1800s, advances in automation are doing the same today in warehouses and fulfillment centers, as goods-to-person technology is being deployed to replace hard-to-find employees. This allows more efficient stocking, more accurate picking, and faster deliveries.
All of this exists extremely well in an ecosphere where customers can self serve. Websites are tailored to users and industries, so once the technical application process has been concluded on the plant floor, purchasing can transact in a convenient way for them.
This change in the industry ethos has also created a wonderful opportunity where talent is concerned. For decades, industrial distribution and service were supported by a narrow demographic perpetuated by a “promote from within” process. However, today’s required skill sets are found in various demographics over all age groups. The benefits of diversity and inclusion naturally complement the work to be done. As technology evolves rapiBy Joe Limbaugh, Motiondly, a flywheel effect of new, bright, and diverse talent will become central to organizational success.
To be the best supplier that they can be, companies need to take a good, hard look in the mirror. They need to understand what they’re doing well and what needs improvement, all to effectively support their customers. No doubt some will become confused and believe that today’s changes don’t necessarily translate into action items on their part. Maybe they’re right; history will be the best judge of those decisions. However, the daring companies that believe a revolution is at hand will use it to their advantage. EP
By Joe Limbaugh, Motion
Joe Limbaugh is Executive Vice President, Supply Chain/Operations Support/Marketing/Enterprise Excellence at Motion, Birmingham, AL (motion.com). He’s responsible for a variety of functions including product procurement and inventory, distribution and fulfillment centers, branch operations support, and productivity improvement.