Leaders of distribution companies are no different than any other business leader. And as much as they all hate to admit it, they are at times their own worst enemies when it comes to working “in” rather than working “on” their businesses. The day to day takes precedence over the strategy. However, the best in class performers all know this and take active measures to ensure they’re moving their organizations forward in real and meaningful ways.
And one of the most meaningful ways is constantly looking to technology to increase the effectiveness of their business. Here are 5 emerging technologies that, when properly executed, will make big dents in the growth of your distribution business:
1. Cloud Computing
Software as a service (SaaS) is anticipated to grow 20 percent to $12 billion in revenue this year, according to IT research company Gartner. Yet for an industry with tight margins and a reluctance to invest in new technologies, distributors view SaaS with more than a critical eye. But as more companies adopt cloud technology for their business, the service is becoming difficult to ignore.
For distributors, one of the key applications and often the first to migrated to the cloud is their ERP system. And Netsuite is the 800 pound gorilla. A number of distributors have found that moving to a hosted application gives them a comfort level around no longer having to own and manage their own servers and software layer. Another benefit is seen by not having to manage and deal with updates and upgrades on premise solution requires.
2. Mobile Technology
A related topic to cloud is mobile technology. Over the past few years, a significant shift has taken place in technology, away from the traditional office-based tools of technology that offers portability and accessibility. And while the development of new technologies often takes place at the speed of light, the adoption rate of mobile technologies such as smartphones and tablets has risen at a nearly unheard-of pace. Best in class distributors always find new and exciting ways to leverage technology, and especially mobile technology, to push their businesses forward faster than the pack.
3. Pricing Analytic Tools
Using technology to improve pricing is slowly but surely gaining a strong foothold in the distribution industry. In fact, some experts have gone so far as to say that using technology to optimize pricing may no longer be a differentiator for distributors in five years. Instead, what's called strategic pricing may be expected, much as more advanced inventory management tools are now.
4. Business Intelligence Tools
The most effective managers of a distribution organization are constantly on the lookout for meaningful ways to improve their businesses, which often times lead to the most interesting questions. Which of our customers are the most profitable? What are they buying? How can we reduce costs? Which salesperson is contributing most to our Gross Profit? And which is the least? To do this effectively, they’re looking to business intelligence technology tools (BI) to get the answers.
While most organizations have a ton of data, without the proper BI tool, you’re just left with a ton of unanswered questions. Business Intelligence tools provide actionable information. Data from the past helps them gain a better understanding of trends that help guide and improve the future of their business.
4. E-Commerce for Distributors
When e-commerce is mentioned, often times Amazon or Zappos comes to mind. And while that model is extremely successful in the business-to-consumer market (B2C), it's sometimes a stretch for some to see how that model can be applied to business-to-business (B2B). Many of the more successful distributors have found a way to create a niche market and leverage this even more by utilizing online sales tools. Investing in e-commerce capabilities gives you the ability to scale like never before.
And keep in mind, this tool doesn’t necessarily have to just sit out on an island all by itself. Some of the more successful distributors find ways to integrate this tool into the toolkit of their in-house sales staff getting a greater ROI on their initial investment.
Hopefully, you’re one of those best in class companies we’ve referred to who are finding success leveraging some, if not all, of these technologies. Which of these are you leveraging? Please share your thoughts with us. We’d love to hear about your experiences in the Comments section below.
If you own or manage a distribution or manufacturing company in Los Angeles, and you’re looking to stay up to date on the latest technology, be sure to download your free guide, How COOs at Los Angeles Distributors and Manufacturers Get More Done: A Guide to Productivity, Data, Staffing, Delegation, and Making It Home for Dinner Most Nights.