Look for These Trends
in Distribution Services
“Amazon Effect” Leads Businesses toward New Technology, Greater Interactivity
TIM DUNFORD, VICE PRESIDENT — DISTRIBUTION
When ordering products and having them delivered, today’s consumers demand more because they know what’s possible. By itself, this should drive distributors to stay on their toes. But distributors also face intense competition because new enterprises can innovate themselves to success. Distribution channels and supply chains must master the newest technologies and immediately get ready for what’s on the horizon. It’s crucial to stay informed on the latest trends impacting our industry.
Here are some of the leading trends in distribution:
Greater use of new connected technologies: To get the greatest benefits from the Internet of Things, today’s distributors are trying a variety of techniques to manage and monitor shipments more precisely including deployed radio frequency identification, Bluetooth monitoring and machine-to-machine connected devices.
Continued adoption of automation software: Companies are freeing up time for bigger jobs, and using fewer administrative workers, by automating repetitive tasks. Distributors are primarily automating data entry, payroll, order management and onboarding, according to one survey, which also showed that 68% of distributors earned more revenue and reduced their business costs after automating.
Even more investment in e-commerce: E-commerce has certainly been around for a while, but its many aspects are now being explored more deeply by distribution companies. For example, real-time pricing (e.g., quantity-tier pricing, discounts and promotional pricing) can be integrated into an e-commerce platform. And the e-commerce sales capability is being further extended by encompassing order history, order status, purchase order and invoice visibility. These functions, once the exclusive domain of sales reps, can free up businesses to focus more on their customers, rather than back-office tasks.
Did you know? In 1983, the California State Assembly held the first hearing on “electronic commerce.” CompuServe and Prodigy testified, but Quantum Technology was denied permission. It didn’t stop them, though. They eventually became AOL.
More applications of machine learning and artificial intelligence (AI): Distributors are using machine learning and AI to enhance a variety of distribution technologies, including supply chain planning, warehouse management systems and robotic vision systems. Many distributors are now using AI in their fulfillment operations. (Amazon, of course, is the prime example; their robots and conveyor belts shuttle bins around to be packaged, labeled and shipped with utmost precision.)
The push toward greater interactivity: One of the consequences of the “Amazon Effect” on retail is changing customer expectations. Today’s consumer is now accustomed to comparing prices online and ordering any item, at any time, in the most effortless way possible, and expecting the order will be delivered on time, with no mistakes. As distributors, we need to acknowledge this reality by offering appropriate, interactive, customer-facing online resources. As part of this effort, we need to ensure that customers can efficiently access our products and services through several channels.
Challenge of “disintermediation:” By and large, manufacturers and retailers aren’t reluctant to cut distributors out of the sales equation, choosing instead to use their own networks and platforms to get products to consumers. Distributors must respond by providing services that a manufacturer cannot provide themselves such as Vendor Managed Inventory tools, which automate certain parts of distribution, saving the retailer time and money. These tools require greater investments in technology on the part of distributors, but it’s an investment that can pay off.
Clearly, those of us involved in distribution face challenges, but we also have many opportunities in front of us. It’s up to us to take advantage of them.