This is a part of the 2015 Distribution Trends Special Issue. The annual feature was researched and written by MDM editors based on interviews with dozens of distributors, as well as industry experts and manufacturers. MDM also conducted a survey of its readers to uncover the trends outlined in this issue.
2015 Distribution Trends Special Issue
Distributors routinely hear they must deploy analytics or drastically upgrade their technology to remain competitive, but Scott Bebenek, president, Independent Distributors Inc., Mississauga, ON, thinks some company owners should instead refocus their efforts on business fundamentals before adopting the latest tools.
"I don't think we talk about the basics for the independent distributor enough," Bebenek says. "We talk about stretching yourself a lot – 'Oh, you've got to get into analytics … you've got to have a catalog on your website, you've gotta, gotta, gotta.'
"In the meantime, I'm wondering if the independent distributor really knows how to determine what their true value proposition is. And that's only 50 percent of it. I don't think they're very good at implementing it through their organizations and developing a consistent and convincing message."
In other words, Bebenek says, businesses shouldn't forget their core strength – a sound distribution model built of well-trained personnel who know how to sell products, market the company's strengths, demonstrate financial savvy and deliver excellent customer service.
Other industry experts agree, including Ranga Bodla, wholesale distribution industry lead, NetSuite. He says instead of asking about the next big thing, better questions for a distributor should include, "Do I have the right foundation in place?" and "What's hype versus what do I actually need to do?"
The focus on technology can be a problem, says Roger Woodward, president, Alliance Distribution Partners LLC, Gallatin, TN. Many distributors don't have the business disciplines built into the business yet before they take the plunge into adding analytics staff or investing capital in new equipment.
"They still need to formalize the basics," he says, so that the information provided across platforms is consistent. "Too much info is still locked up in someone's mind."
The need to return to business basics is resonating with many distributors this year. Technology investments can help meet the basic needs of the customers, but at the end of the day the business is the same regardless of the tools, says Bob Dooley, president, Global Industrial, Port Washington, NY.
"We have to have ways to help our customers beyond looking for a product and finding it, we have to be able to help them source or even help with projects," he says. "It's constantly providing value without providing additional cost to them."
To avoid unnecessary costs, distributors must be careful about getting caught up in the latest buzzword, such as the cloud, or the newest technology, such as a mobile app, because they might not provide a benefit for the customer or the bottom line, says Kevin Boyle, president of Industrial Distribution Consulting LLC.
Boyle says he worked with a company 15 years ago that was on the "bleeding edge rather than cutting edge" of technology, going so far beyond the trends at the time and losing touch with its clientele that it eventually went out of business.
"They were very innovative, but they made a strategic decision, which would seem like nothing today – they decided, what difference does it make to a customer where I have my inventory as long as he gets it when he wants it?" Boyle says. But it did matter to the customer, who took its business to a distributor that considered its needs.
"We're at an inflection point in maturity for many distributors," says Guy Blissett, wholesale distribution specialist leader, Deloitte Consulting LLP. "Consolidation, growth and capital investment have brought us to a point where many distributors have outstripped their existing operating model. There are no centers of competency or excellence in these situations."
Bebenek says a disregard for business 101 is happening too often, especially among smaller independent distributors who struggle to differentiate themselves. Even with all the technical bells and whistles dangling in front of them, the secret to success remains constructing a solid foundation and then building skyward.
"You keep adding floors onto the house, but if the foundation wasn't built for the sixth and seventh floors, the building is going to crumble, right?" Bebenek says. "Independents are beautiful because they're a small, nimble, business model. That's why they'll never go away. That's why purchasers like them. But when you're small and nimble and always moving and darting around, it makes it even more important to make sure that your vision is always at the core of what you're doing."
