We’ve already looked at Operational Mobility, Traceability and Business Expansion in this Wholesale Distribution Industry Outlook blog series. Let’s continue with a mid-term industry challenge, Analytics.
The core wholesale distribution business is about managing costs. Reducing safety stock, better leveraging warehouse resources, and improving and gaining efficiencies on cube utilization and route planning can make significant differences to a distributor’s bottom line. Outside of operations, analytics can be leveraged to assess pricing strategies, customer profitability, and program performance. With the availability of data today, wholesale distributors can see a huge internal rate of return on analytics investments. Although the big data topic gets much press, the real challenge for wholesale distributors is what to do with the available information. The goal of analyzing data should be to drive out costs, find missed revenue opportunities, and make faster decisions with fewer resources. That’s very easy to say, but with the sheer volume of data available and the embedded experienced-based decision making that is so common in this industry, investing time, talent and technology are often challenging.
Data can come from several sources – manufacturers, large retailers and a great number of mom-and-pop shops. Collecting, organizing, calculating and making the right data available in close to real-time provides wholesale distributors better visibility and the capabilities to make decisions more frequently. Consider these areas to target improvements through analytics:
- Reduce safety stocks and overall inventory levels freeing up cash for other investments
- More efficiently use warehouse resources, reducing overtime and improving productivity
- Gain greater efficiencies on equipment, assets and cube utilization through ad-hoc what-if analysis
- Optimize route planning and loading
- Improve purchasing decisions considering downstream impact on warehousing costs
- Better negotiate deals that require complex calculations of pricing conditions and discounts
- Provide manufacturers intelligence on business decisions
- Stratify customers and products for better and faster profitability analysis
One of the key business processes where data analytics can make an immediate impact is with Sales & Operations Planning (S&OP). The right analytics can transform this process from a rear view mirror, gut-based meeting into a fact based, scenario planning exercise. This transformation, as well as gaining the benefits below, is not just as simple as creating the right set of analytics. It requires a cultural shift that must be driven from the top down. The wholesale distribution business has traditionally been run by seasoned industry executives that have excelled through their impeccable decision making based on their knowledge of the industry. Moving ahead, wholesale distribution leaders need to make the investment in both technology and analytical talent to fully leverage the power of available data.
- Have you defined the needed data and corresponding analytics needed to make key improvements in your business?
- What investments have you made to make real-time analytics a reality (e.g. technology, process, people)?
- How do you plan to create an analytics-driven culture?
Read the next blog in this series – Wholesale Distribution Industry Outlook: Retail Revolution.