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Most business problems that impact profitability boil down to a pretty straightforward ROI calculation: Will the cost to fix the problem justify the expense? The rub is getting the awareness of the scope and impact of the problem to know there is a problem and how to fix it.
The issue of data synchronization (see article on p. 1) is just such an iceberg for wholesale distribution. Part of the problem is that free markets tend not to be neat and orderly by nature. Why should I push for standards when every fiber of my business is oriented to gaining competitive advantage in my markets? Won't whatever benefits gained by clean data in the supply chain be neutralized if my competitor gets the same advantage? A fair question.
The bottom line of the study is there is an opportunity to add a full percentage point to the bottom line of a manufacturer and three quarters of a percent to the bottom line of a distributor if industries can figure out how to standardize and maintain clean product and pricing data. That's a compelling answer to why this issue is so important.
Many leaders across different product segments are championing this cause, for good reason. If the independent channels of distribution are to remain competitive, they have to continue to claw for every percentage point. Third-party logistics and purchasing entities will continue to drive margins down and put pressure on distributors that have the capabilities to offer a deeper array of value-added services.
The technology is there to build data warehouses. Data errors and the rework costs they carry may not sink your business this year or next, but there are so many hidden costs to this iceberg that suck up your resources just navigating the daily emergencies. Is one percent to the bottom line worth working on?