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By Ralph Hess • April 10, 2020

Five Keys for Modernizing Your Wholesale Distribution Business

The wholesale distribution industry is at an inflection point. Trends such as online marketplaces, the digitization of the buyer journey, real-time data and artificial intelligence are shaking up the wholesale distribution landscape. How each wholesaler responds largely will determine the fate of their business.

The tricky part is that modernization will require several deep adjustments by wholesale distributors. These aren’t slight tweaks to the business, they are fundamental realignments that transform a wholesale distribution operation for competitive operations today and in the coming decade.

While there many things that forward-thinking wholesale distributors must adjust, five keys stand out as essential for continuing competitiveness.

Key #1: Strategy Over Operations

With wholesale distribution a bridge between manufacturers and customers, operational efficiency historically has been the focus. But with encroachment by direct-to-consumer manufacturing and online marketplaces, today’s wholesale distributors need to expand beyond the role of logistical middleman. New business models and revenue streams are required, and this requires a greater focus on strategy.

Central to this heightened strategic emphasis is data intelligence. While the typical wholesale distributor uses data for operational efficiency, the best wholesale distributors are instead using it for improving customer service, generating additional revenue streams, gaining competitive insight and driving product innovation, among other uses.

Data intelligence becomes important component of this focus on strategy and innovation.

Key #2: Innovative Thinking

Because business models must change, innovation at wholesale distribution businesses must improve. Logistical competency is no longer enough; new revenue streams and business models are required, and this takes innovation.

This is a key difference between wholesale distributors that are modernizing and those that are falling behind. While nearly all of the best-run wholesale distributors say they use innovation well or very well, according to IDC research, only 8 percent of distributors that are struggling say the same thing.

A clutch of new technologies can help drive this innovation, including enterprise collaboration tools, machine learning, advanced data analytics and dashboards, mobile devices that can execute all core business functions, and internet-connected devices, among others.

Key #3: Top Customer Care

Customer service is becoming an important differentiator for most industries, and wholesale distribution is no exception. If anything, superior customer service is doubly important in an industry where customer loyalty often is one of the main things that separates a business from the competition. So modernization requires that distributors get serious about exceeding customer expectations.

The best wholesale distributors are delivering on superior customer service through two primary methods.

First, they are offering a wider range of customer channels including text messaging and chat, and they are unifying these channels within their backend systems so all customer interactions are captured and stored in a central location for customer care continuity. These added channels break down the barrier between the business and customers, and the unification of the customer channels improves interaction.

Second, the best wholesale distributors are reducing operational silos through enterprise resource planning systems (ERP). These systems serve as a single source of truth for the business, and enable better analytics for understanding buyer needs and providing a better overall customer experience.

Key #4: Talented Employees

Strategy, innovation, and superior customer care. These all require talented employees, an area where some wholesale distributors struggled. The way forward requires attracting top talent, however.

To get the talent that distributors need, the employee experience needs to improve just like the customer experience. Wholesale distributors can boost the work-life experience and attract top talent through a number of means, including talent management software, process automation, user-friendly IT systems, increased collaboration and smartphone-enabled operations, among other methods.

Creating a truly inviting work environment might not be immediate, but it is imperative. There’s a reason that talent is one of the most valuables business commodities today.

Key #5: Centralized IT Systems

All of these deep business adjustments are enabled by a fifth key, which is a centralized ERP system that serves as the single source of truth for the business.

A cloud-based ERP system breaks down silos and brings the data intelligence necessary for wholesale distribution modernization. It helps distributors foster innovation and collaboration, improve both customer and employee experience, and make it possible to fully take advantage of the technological shifts that are disrupting wholesale distribution today.

There’s a reason why IDC research shows a large discrepancy between the IT capabilities of the best-run wholesale distributors and those that are struggling today. Modern IT systems, ERP in particular, are critical for competitiveness in the age of online marketplaces, heightened competition, agile business models, and big data.

With a modern, centralized IT system, wholesale distributors can digitally transform their business for better efficiency today and the foundation needed for future change in the uncertain years to come.

For more on how and why it is necessary to transform your wholesale distribution business, see our complete guide on the topic, Navigator’s Modernization Guide for Wholesale Distributors .