13 Jun Distribution Model
Posted at 19:41h in Business, Challenges, company, Distributors, ERP, Industry, Lighting, Role of distribution
4 KEY CHALLENGES IN THE DISTRIBUTION INDUSTRY FOR ERP
- Distributors need to ensure that all business resources and operations are optimally aligned with demand. Working to demand projections or sales forecasts is a very poor substitute for a single, complete and up-to-date picture of demand. The single most important initiative for distributors is to provide organizations-wide access to information that lets managers and supply chain partners make fast, strategic decisions.
- Distributors need access to real time inventory data to drive proactive, responsive sales operations, make good purchasing decisions, and minimize inventory costs. Companies need the ability to identify redundant and slow moving inventory. Two key metrics are the cash cycle and inventory turn.
- Speed or business velocity determines success in the distribution industry. Poorly integrated systems, reliance on manual processes, or re-keying data already available in one system but not accessible to others is always bad news—a major cause of delays and a common source of errors. Along with being responsive to customers, distributors also need to ensure that suppliers rely on them as trusted trading partners.
- Distributors work in very competitive markets. For the external customer, the speed of response, the accuracy of information such as lead-time data, and quality care across all contact points affects future orders. Getting customer service right is a “must” for sustained business growth!
Lighting, Quality & Training … the Role of Distribution?
- Light quality is very subjective by nature. However, there are several light characteristics that are universal. These factors include color-consistency, color uniformity and application-specific lighting. A combination of these factors when applied to the customer’s liking will make products or spaces appear in the most natural way as possible, without light distortion, and with uniform distribution. The goal is to do all of this in a robust, long- lasting platform at a competitive price point.
- While cost is an obvious consideration, a simple retrofit of LED lamps has an almost immediate payback, as “plug-and-play” installations dramatically cut labor and installation costs, without a need for time-consuming re-wiring projects. When compared many traditional lighting technologies, LEDs save on the order of 50 to 80 percent. The energy savings alone provide payback periods of 2 years to less than 1 year.
- Learning about the diversity in products and applications is the biggest advantage for electrical distributors. The more they learn about how certain products operate in specific applications, the more likely it may be for potential revenue streams to open with current customers looking to upgrade to quality LEDs. Additionally, future customers who may be in the market to make a lighting upgrade, but who don’t know which top-tier products to select for their particular application will need guidance. It is lighting expertise that will help a distributor stand out and create value.
How Suppliers Should Manage Their Distributors
- So how should suppliers treat distributor companies and their employees? Like employees or like customers? Which is it? Gallup gets these questions from supplier companies a lot. Our research in several industries — including the insurance, medical devices, consumer packaged goods, financial services, and automotive sectors — reveals a nuanced answer: You must treat them as if they are both. More importantly, in the most effective supplier-distributor relationships, suppliers don’t view distributors as merely employees or customers — they see them as partners.
- Developing a partnership with your distributors is vital to your success. Supplier firms can’t mandate management policy to a distributor, but suppliers can share best practices and resources with partners in a mutually beneficial relationship.
- Gallup’s studies of business-to-business relationships have found that suppliers that create impact — those that are knowledgeable about their distributors’ business, give them valuable ideas, and help them reach their goals — develop powerful partnerships that improve performance.
- For suppliers, distributors are the face of your company. They either accentuate or cloud your brand promise with your end customers. Building real partnerships with distributors, however, makes the supplier’s brand promise vital to the success of suppliers anddistributors. That partnership can improve both organizations’ sales and performance — but it can also serve as a profound differentiator in a crowded market.