What lies ahead for distribution companies in the coming year? The outlook varies significantly by industry, with predictions ranging from modest declines to slight growth. A 2015-2016 survey of distributors, conducted by financial services firm Robert W. Baird & Co., painted a cautious picture. Respondents frequently used terms such as “flat,” “negative,” “slowing,” and “weak” to describe their state of affairs, with some even bracing for potential challenges ahead. For many sectors, simply maintaining stability is considered a positive outcome. As David Manthey, senior research analyst at Baird, aptly summarized, “Flat is the new up.”
Thriving Amid Economic Shifts: How Distributors Can Adapt and Succeed
Despite each industry’s unique challenges, certain economic factors impact all distributors universally. A key influence is the weakening Chinese economy, which plays a pivotal role in U.S. industrial product consumption. When China’s demand slows, the ripple effect is felt globally. Another widespread issue is the overabundance of materials and products, leading to lower prices and market saturation.
As David Manthey, senior research analyst at Robert W. Baird & Co., succinctly put it, “The world is awash in too much of nearly everything.”
However, even in the face of economic uncertainty, opportunities for growth and profitability remain. Manthey, along with other experts speaking at the 2016 Modern Distribution Management (MDM) Distribution Industry Outlook webcast, emphasized the need for distributors to rethink their business models. They encouraged investing in innovative approaches to market strategy, anticipating evolving customer needs, and enhancing the unique value that distributors bring to their clients.
The key question for distributors is: What will your customers need two to five years from now, and how can your business start preparing today? By staying agile and forward-thinking, distributors can remodel their distribution business to thrive even in challenging economic conditions.
Breaking Free from the Status Quo: Rethink, Refocus, and Remodel Your Distribution Business
Clinging to the status quo is no longer an option for distributors seeking growth in a rapidly evolving marketplace. Tom Gale, publisher of MDM Magazine, emphasized this point during a presentation on the future of distribution, urging companies to rethink and remodel their business strategies to remain competitive. He outlined three key steps for a successful transformation.
1. Refocus and Adapt to Changing Markets
The first step is to refocus and take a hard look at your business, industry, and customers. Instead of fixating on your products, shift your attention to the evolving needs of your customers and the dynamics of the market. For example, millennials are stepping into procurement and supply chain roles, bringing new preferences and expectations. These generational shifts could transform how your products are purchased and serviced.
Additionally, changes in customer buying habits or demographics might prompt you to expand into new product areas or enter untapped markets. This process requires deep introspection into your company’s core values and its value proposition. Thorough research and a willingness to adapt can help you remodel your distribution business to align with future market demands.
2. Recruit Talent Beyond Résumés
The second step is rethinking your approach to talent acquisition. In an era where products and processes are increasingly tech-driven, finding skilled employees is critical but challenging. However, a rigid checklist of credentials often overlooks the best candidates.
Jenel Stelton-Holtmeier, editor of MDM Magazine, advised that creativity, problem-solving abilities, and adaptability are often more valuable than specific technical qualifications. Many skills, such as digital literacy or familiarity with business analysis tools, can be taught, but innate qualities like critical thinking and common sense cannot.
Moreover, as technology evolves, so do the skills required. Investing in ongoing education for your employees ensures they stay ahead of the curve in areas like e-commerce, analytics, and emerging digital tools. This approach not only builds a more agile workforce but also fosters employee loyalty and satisfaction.
3. Invest in Strategic Technologies
The final step involves embracing the technological advancements shaping the industry. The days when IT in distribution meant merely maintaining an ERP system to process transactions are long gone. Today, technology drives product innovation, process improvements, and customer engagement.
Invest in tools that enhance your operational efficiency and customer experience, such as AI-powered analytics, cloud-based platforms, and e-commerce solutions. By staying ahead in the digital landscape, you position your business as a forward-thinking leader in the distribution industry.
The Path Forward
As Gale and other industry experts have stressed, remodeling your distribution business is not just an option—it’s a necessity. By refocusing your strategy, prioritizing the right talent, and leveraging cutting-edge technology, distributors can adapt to the demands of a changing world and secure long-term success. The time to act is now—don’t let outdated practices hold your business back.
Modernizing Distribution: How NetSuite ERP Powers Business Remodeling
Enterprise Resource Planning (ERP) systems have evolved far beyond their origins as simple tools for managing accounting transactions. Today, ERP systems like NetSuite are integral to the transformation of distribution businesses, offering advanced technologies and features that are critical for staying competitive in a fast-changing marketplace.
ERP as a Strategic Asset
Tom Gale, publisher of MDM Magazine, highlights a significant shift in how distributors view ERP systems: “Leading companies are viewing ERP as a competitive tool and rapidly starting to bring in new functionality to their ERP systems or to buy add-on products like analytics, forecasting capabilities, and e-commerce.”
NetSuite ERP embodies this evolution, offering a unified platform that integrates analytics, inventory management, demand forecasting, and e-commerce tools. These capabilities enable distributors to remodel their distribution business by streamlining operations and enhancing customer experiences. With NetSuite’s comprehensive suite of features, distributors can adapt to changing market demands while gaining real-time insights to make data-driven decisions.
Embracing Cloud-Based Solutions
One of the most transformative advancements in ERP technology is the shift to cloud-based platforms. NetSuite’s cloud-first approach allows distributors to move beyond the traditional model of on-premises servers that require constant maintenance. Instead, IT departments can pivot from a support role to a strategic function, focusing on evaluating and implementing new technologies that drive business growth.
By leveraging NetSuite’s cloud capabilities, distributors gain unparalleled flexibility, scalability, and accessibility. Employees can access critical business data from anywhere, facilitating better collaboration and faster decision-making. Additionally, cloud ERP reduces the need for costly hardware investments and ensures that the system stays up to date with the latest features and security measures.
Expanding Functionalities to Stay Competitive
The modular nature of NetSuite ERP allows distributors to enhance their systems with industry-specific add-ons and integrations. For instance, distributors can incorporate advanced analytics tools to identify market trends or implement e-commerce capabilities to meet the demands of online buyers. NetSuite’s forecasting features also enable distributors to predict inventory needs more accurately, reducing waste and improving customer satisfaction.
Moreover, NetSuite’s robust automation features streamline critical processes such as order management, procurement, and financial reporting. This level of efficiency empowers distributors to focus on strategic initiatives, such as expanding into new markets or developing customer-centric solutions.
Driving Business Transformation with NetSuite
Distributors seeking to remodel their distribution business need tools that can adapt to their unique challenges and opportunities. NetSuite ERP provides a foundation for this transformation, equipping companies with the flexibility, insights, and efficiency needed to thrive in today’s competitive landscape.
By investing in a modern, cloud-based ERP like NetSuite, distributors can turn their IT departments into innovation hubs, expand their operational capabilities, and position themselves for long-term success. The future of distribution is here, and NetSuite is at the forefront of helping businesses embrace it.
Balancing IT Investments: Building a Strong Foundation for Innovation in Distribution
Allocating your IT resources effectively is a delicate balancing act, especially in the fast-paced world of distribution. Success requires a strategic approach that addresses both current operational needs and future technological advancements. Leaning too heavily in either direction—solely maintaining outdated systems or exclusively chasing emerging technologies—can jeopardize your business’s stability and competitiveness.
IT Budgeting as a Strategic Remodel
Think of remodeling your IT infrastructure as renovating a home. Before you install cutting-edge features like solar panels or smart motion sensors, you need to ensure the foundation is solid. Over-investing in stabilizing old systems might leave little room for innovation, while pouring resources solely into the latest tech could cause everything to crumble if the underlying systems can’t support the load.
For a distribution business looking to remodel its distribution processes, the same principle applies. IT investments should strike a balance: shoring up critical systems to maintain reliability while also allocating resources for transformative upgrades that enhance efficiency and customer experiences.
Building for Today While Preparing for Tomorrow
Modern ERP solutions like NetSuite can help achieve this balance. By consolidating aging systems into a unified, cloud-based platform, distributors can address foundational needs while unlocking advanced capabilities like real-time analytics, demand forecasting, and e-commerce integration. This approach ensures your IT resources are being used to both stabilize and innovate, providing a strong foundation for growth without compromising on modernization.
The Key to Remodeling Success
To remodel distribution business IT systems successfully, take a phased approach: evaluate what elements need immediate attention and identify opportunities to integrate forward-looking technologies that align with your business goals. With thoughtful planning and strategic execution, your IT investments can drive sustainable growth and position your distribution business for a competitive future.
