Are Digital Tools Making Your Business More Competitive?-Distributors in the Digital Era #26

Are Digital Tools Making Your Business More Competitive?

Adopting and using digital tools are becoming an essential capability for achieving business results. Distributors in the lead have turned the corner on creating an actionable digital vision and are driving improved customer experiences and business profits. Many distributors are making significant investments and learning how digital tools can drive results for their business. Distributor leaders who are not actively pushing their companies forward to explore and implement digital tools are placing their businesses at risk as the use of digital tools becomes a common practice and major factor for achieving competitive business economics.

 


New Research Report Coming This Fall

These are the preliminary findings from our upcoming report on digital tools progress and strategic solutions. The exhibit below captures overall perspectives gathered from nearly 100 distributor CEOs. Results in blue represent the impact of digital tools on today’s business and the orange results are predictions for impact in only three years. The findings are clear—digital tools are becoming a standard ingredient for running a profitable distributor business. And not just some digital tools, but all the tools we tested. The horizontal axis lists 10 tools that span a wide range of applications for distributors and all are becoming more important.

Are Digital Tools Making Your Business More Competitive?

As with all research, the most important answers are in the details. We are in the middle of analyzing our data and conducting follow-up conversations. Three key implications for distributor leaders are emerging:

  • Your people expect you to have a digital vision. Distributor workers are keenly aware of the disruptive actions taken by Amazon and the impact on traditional supply chain players like retailers and distributors. They are nervous and expect distributor leaders to explain how their companies will become modern, digitally-enabled businesses.
  • There are many paths to becoming a digital distributor. Some distributors are implementing digital tools to expand value created for their best customers, while others are finding the greatest benefit from digital tools is about attracting and winning new accounts. Some distributors are focused on automating transactions, while others are building awareness of their value-added solutions. These are just two of many different digital opportunities.
  • Digital tools are opening the door to business model innovation. To be sure, digital tools are improving operational productivity and selling effectiveness, but they also have the potential to change the way a distributor does business. Innovation can take the form of restricting a distributor’s channels—meaning the number and role of field versus inside sales, or branch locations versus online servicing. In some cases, innovation can mean expanding into new, adjacent business models with new roles around manufacturing, logistics, outsourcing and data-driven solutions.

What Do Manufacturers Say

Our work also includes input from manufacturers on the impact of the use of digital tools on the supplier’s own business results. Again, our early findings are adding fuel to the importance of digital tools in a modern, competitive supply chain. Manufacturers see progress, but not enough. The distributors that are viewed as “the best partners” are ahead of all other distributors, but progress is still lackluster. In the not-so-long-term, a lack of distributor progress around distributor tools may cause manufacturers to reset their assessment of distributor value chain effectiveness relative to new and emerging channel options. Recognizing this potential threat to the long-standing manufacturer/distributor partnership, distributor leaders are sharing their digital visions and looking for collaboration opportunities to achieve mutual returns from digital investments. We’re just beginning to look at this part of our research and will have more to say about preliminary findings in out next blog post.

Our report will be published this Fall, but if you can’t wait and would like to have a conversation now, please reach out to me at mark.dancer@channelvation.com. I welcome your insights and questions and will be happy to share what I’m learning.

I hope you’ll also get caught up on “all things digital tools” by reading my previous blog posts here, and subscribing to NAW’s blog series, “Distributors in the Digital Era,” here so you can get my weekly blog posts delivered to your inbox.

About the author:

Mark DancerMark Dancer, President of Channelvation, Inc., is a channel strategist and leading authority on digital transformation. He is also an NAW Institute for Distribution Excellence Fellow. You may reach Mark at mark.dancer@channelvation.com.

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