The Race for Digital Innovation - Modern Distribution Management

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The Race for Digital Innovation

Customer loyalty via analytics systems is key to distributors success.

Editor’s note: Hear more on this topic from Meister in his session, “A Growth-by-Analytics Success Story: How a €120-million German power transmission distributor transformed with analytics,” at MDM’s upcoming conference, MDM Analytics Summit 2018 on Tues. Sept. 19 in Denver.

Innovate or die. That is the mission that’s driven Ludwig Meister through a five-year digital analytics transformation. As CEO of our third-generation, medium-size power transmission and industrial products distributor based in Germany, I’ve found the key to success is to spend time each day researching and keeping up with the latest market developments.

It’s how we’ve gone from being a regional player that needed to stretch to remain relevant to becoming a leading example of how a company of our size — 15,000 customers, 300 employees and €120 million in annual revenue — can succeed in the race for advantageous digital innovation.

The market for technical distribution in Germany and the role of the distributor in value creation is changing rapidly, as it is in the U.S. Personal relationships between distributors and customer are still of utmost importance. But customer loyalty via tailor-made digital systems is key to success. Another key, process efficiency that results in lower costs, is also becoming mandatory for profitable survival.

At Ludwig Meister, acknowledging this reality through our five-year transformation meant digitizing and thus optimizing back-end processes, such as purchasing and logistics.

For me, digitization means achieving better results with the existing talent we have through digital analytics processes that are completely reliable. Without state-of-the-art analytical systems, e.g. for sales support, all of the efforts in the world will fall short of bringing distributors a significant return on their investment.

Digital Efficiency

Innovative analytics upgrades in sales support are mandatory to:

  • handle a continually growing diversity of products, and
  • nurture sales managers who need to have deep technical understanding of those products AND advanced process consultancy know-how.

To this end, we developed an internal tool that supports our sales team online through client-specific, data-based campaigns that identify product categories where additional orders are most likely, among other capabilities.

We invested €7.5 million into our data gathering and processing capabilities to build a CRM that today allows us to:

  • optimize procurement decisions;
  • determine the true cost of doing business on a client-by-client basis;
  • help identify our best and worst customers from a true net profit perspective;
  • segment customers for relevant marketing and sales campaigns;
  • test and react in a timely way our marketing campaign performances;
  • maximize warehouse and logistics efficiency for our and our clients’ success.
  • In today’s technical distribution market, there is a continually rising need for incremental digital innovations. At the core, though, is still the main target that our parents and grandparents already had to strive for: The client needs products quickly and reliably at low processing costs. 

Finally, on top of any amount of money invested into software and systems, what it really needs to rise to the occasion is a lot of time, heart, soul and company-wide determination to succeed. 

I reserve approximately two hours per day for innovative thinking – reading into new topics, gathering feedback from our operations teams and brainstorming for new solutions. Then again, culture eats strategy for lunch. That´s why we concentrate on getting better, step by step, day by day. To monitor our progress, we do not compare ourselves mainly to others, but to ourselves – week by week. The analytics capability we’ve built into the company gives us the steps – the benchmarks – to keep getting better.

Learn more about MDM’s upcoming conference, MDM Analytics Summit 2018, September 19-20 in Denver.

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