Distribution businesses have become increasingly complex with ample opportunities to serve many different customers globally. In the United States alone, wholesale/distributor sales equal approximately $3.2 trillion, which also accounts for roughly 7% of private industry GDP since 1987. The reason for such staggering numbers is partially because distribution spans many large market segments, ranging anywhere from grocery and food-service to furniture and home furnishings. Driving this growth are 3 factors that distributors are finding increasingly important:
(1) Investment in Technology:
Many distribution business owners are beginning to realize the importance of making data-driven business decisions. Unfortunately, many companies are currently stuck using older software systems which are not providing relevant information in a timely and effective manner. As a result, the focus has shifted to implementing truly integrated software that will tie the different facets of the business, (such as order taking to warehouse management to accounting) together. The result for companies who move in this direction is a system that provides real-time information across departments in a timely manner to facilitate effective decision making. For example, a salesperson on the road will need access to updated pricing, product availability, and customer information among many other pieces of information. This highlights the importance of a system that will provide information to all areas of an organization, be it in the warehouse or on the road at a customer’s location.
(2) A Renewed Focus on the Basics:
The emphasis recently placed on technology investment has allowed business owners to take a holistic approach in assessing their current operations. Investment in an inventory management and accounting ERP system is not a decision that should be made impulsively or quickly, but should instead involve a long and detailed search process before any decision is made. At the beginning of this process, one step many companies take is to assess their organizational strengths and deficiencies, and how new software will and should affect this. By taking a well-rounded look at a business, owners are able to ensure they are meeting the basic needs of their clients, prior to investing in technology.
(3) E-Commerce is Critical – but the Back End is Just as Important:
Customers in many industries want a multi-channel experience that will provide relevant and accessible information throughout the duration of the buying process. As a result, online shopping has become a critical component of many successful business models, as it provides customers with easy access to a wide variety of products. What many distributors have learned is that an impressive online store-front is very important; however, the back end inventory management system is equally critical to ensure customers are satisfied with their shopping experience. A strong back end system has the ability to streamline a company’s processes by providing real-time inventory information as well as allocating inventory to specific orders, thus ensuring that a customer receives their shipment without any complications.
A large emphasis has been placed on investing in different types of technologies to improve organizational efficiencies. Whether that technology is in the form of an inventory management system or an e-commerce platform, these have become major considerations of distribution business owners. And use of high-level assessments of the business helps to ensure that distributors are meeting the basics needs of customers.