Collaboration Will Define Competitive Advantage - Modern Distribution Management

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Collaboration Will Define Competitive Advantage

Complexity of industrial markets and professional end users bodes well for traditional distributors, but as AgoNow's Larry Davis says in an MDM podcast, creating value means combining strong digital support and new sales roles.
DEK: During a recent webcast, MDM CEO Tom Gale and White Cup VP of Business Development Brian Friedel discuss how finding the right CRM can help companies create a revenue-driving machine.

At the MDM Digital Distributor Summit in 2019, AgoNow CEO Larry Davis gave a presentation on digitizing your customer journey. He cited a number of research sources documenting the digital migration of industrial customers in their buying processes — and this was prior to the sea change of 2022!

So it was a good time to check in with Davis, almost three years later, to get his views on what changes he’s seen and where industrial supply channels are headed. (Listen to the latest MDM podcast with the player at the end of this article.) His unique perspective comes from a career where he has been in leadership positions with pure wholesalers, also known as master distributors, including president of industrial wholesaler ORS Nasco from 2010-2014.

For pure wholesalers, clarity around value proposition in disrupted supply chains is where both challenge and opportunity lie. And why Davis has been a valued member of the MDM Editorial Advisory Board for more than a decade — this is the stuff that keeps him awake at night and excited to get up in the morning.

No surprise. Customers have continued to migrate to digital for their procurement processes, Davis reports in this update. And that’s why it’s critical for distributors to have great digital content to be keep the customer engaged and not going to another resource in five seconds because they can’t get the product information they need.

But it doesn’t mean being a one-stop shop — cost models can’t support that anymore, Davis argues. “We used to have this endless aisle concept, and we can source anything. Sure, you can source a whole bunch of stuff, but what is it that you sell? What do you create value around? The intentionality of that decision is a massive driving force,” and what’s changing quickly in industrial distribution channels.

He’s also quick to defend the continued importance of personal relationships and sales people, but as a hybrid model. “That hybrid model has forced a lot of change on everybody but no one more so than the external field sales rep,” he says. “For a distributor, they used to be the center of the whole model, and now they’re a component of it. And they have to play a different role, where they were probably the quarterback, to use some kind of metaphor. In the new world, they’re a scout. Their job is to scout out opportunities and look for ways through conversations or walking around the facilities, but looking for opportunities and evidence that we’re winning or losing or we’re creating value or we’re not.”

We also discuss how digital is impacting how channel value is being defined. “When you think about optimizing the channel, integrating with your customers is probably the biggest power move anybody can make, Davis says. “Because it puts you in a digital position to interact with your customers and make it easy and effective for them to procure from you. And the same can be said of the supplier side — if you can be integrated on both sides of that you have now a scalability and sustainability that lets you operate in the marketplace and make decisions on what’s happening in the channel.”

Davis also sees industrial distribution channels entering a time of not just of elevated digital capabilities, but an era of collaboration that revolves around leveraging talent outside your four walls. “You’re not going to have all the talent you need under your roof, and you shouldn’t,” he says. “You can’t afford it. But you’ve got to have these indispensable partners, people that you trust, that execute crisply, that strategic plan with you, that are willing to commit to being accountable to the metrics that drive both of your businesses.

“Those partnerships, whether they’re supplier partnerships, technology partners, consultants, information partners, whoever it is — those decisions are going to be so much more important in this next horizon than we’ve ever experienced. I think that’s another way we have to look at talent is through collaboration.”

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