Distributors have faced numerous challenges recently, including major slowdowns within industry sectors they serve, and losing business when manufacturers develop programs to sell directly to customers.Wholesalers-distributors serving the two strongest sectors, construction and consumer goods, had greater opportunities than those serving volatile and commodity-driven sectors, such as oil, metals, mining and food.Per the National Association of Wholesale Distributors (NAW) (1), Total Wholesale Trade for 2015 totaled $5.35 trillion, down 3.6% from 2014. Even so, employment increased by 61,000 jobs in 2015 to 5.9 million jobs.
Future Growth Drivers
Building future growth will require distributor investments in new technologies, collaboration with manufacturers, and increased internal innovation.It’s also important to increase Human Resources’ strategic role in your organization. Include them in decisions specific to future talent needs – functional areas, levels, experience and specialized skill sets.
New Technologies
Adoption of technological advances is rapidly accelerating throughout manufacturing. Not all technologies are applicable. It’s critical to determine which technology-based investments will lead to increasing productivity, enhancing performance and fulfilling customer needs beyond those addressed by manufacturers.Considerations:
What areas of your organization most need improvement? What productivity or performance enhancements can you expect from investing in specialized technologies? What specific value will your organization be able to add of value to manufacturers and their customers by investing in specific technologies? How well do specific technologies fit with your current capabilities – and with future projections of high-value capabilities? Collaboration
Connectivity is a key theme for future systems. How can you collaborate with manufacturers to fill gaps they identify as weak points to create a completely connected system? Consider hardware, software and services. Being a strong collaboration partner will pay off with manufacturers needing help to meet customers’ needs – and anticipate future needs.Another powerful way to collaborate with manufacturers is to utilize the considerable customer data you have captured (or have access to), yet have not used. Utilizing new technology-driven analytics to turn your data into meaningful customer segments, and provide the basis for developing effective strategies for your company to collaborate with manufacturers who lack this insight, yet are working to identify and fill current and future customer needs.##TRENDING##
Innovative Mindset
To stay on top of the rapid advancements in manufacturing, increasing customer expectations and future opportunities where your organization is well-positioned to succeed will require not only an innovative mindset among a select few within your organization.You and your leadership team will likely need to step out of your comfort zone to instill an innovative mindset throughout your organization. Innovation needs to become an integral component of organizational culture.If this isn’t how you’ve operated previously, it’s critical to demonstrate you and your leadership team truly value their ideas and input. Examples of how ideas could be used will be helpful. Ensure you empower them to look broadly for ideas, and stress the importance of passing on any product or service feedback. Consider creating small groups for employees to share ideas/input with your leadership team. Develop an appropriate reward system.Innovation is being fed by hobbyists, DIY makers and others who are very high-tech in their personal lives. Don’t miss out!
Looking Forward
The rate of new technology adoption is highly unlikely to slow down. Considering that the technological transformation is inclusive of the Internet of Things (IoT), robotics, augmented reality and 3D printing – keeping up will be the challenge.Consider each technology and it’s applications in the context of your business, strengths, and opportunities specific to the sectors you serve. Also consider the value of innovative changes to your business model.
Sources:Beaulieu, Alan, President, ITR Economics (senior economic advisor for NAW), and Murphy, Jon, ITR economist, State of the Wholesale Distribution Industry, National Association of Wholesaler-Distributors (NAW)Guillot, Craig,
Google’s Michael Walton Says Manufacturing Execs Need to Encourage a Culture of Innovation, Chief Executive, May 13, 2016Gordon, David, Channel Marketing Group, Ray, Allen, Allen Ray Associates,
16 Distribution Industry Trends for 2016, Electrical Trends,
www.electricaltrends.com, January 27, 2016Bono, Robert, Pillsbury, Stephen,
2016 Industrial Manufacturing Trends, strategy&/PwC, 2016
