The 2020 Mid-Year Economic Update_long

The 8 Traits of Resilient Distributors

Distributors who have developed these qualities and built resilience into their organization are ready to adapt their strategy for the next normal.
Close up view of a small wild plant growing on an urban walkway growing through the cement. Mental health concept for resilience, perseverance or growth

Learning about the stellar results companies get from implementing best practices often sparks inspiration for distributors. Best practices that get a lot of attention include strategic pricing, inventory stratification, customer stratification, supplier management, digital marketing or any one of the 47 best practices we’ve identified in our optimizing distributor profitability framework as game-changers in distribution.

However, as the industry faces major change due to COVID-19, catching inspiration can seem as challenging as the road ahead. Plus, it takes more than inspiration to successfully implement a best practice. Though your impulse might be to take a best practice and run with it, we encourage you to first evaluate your readiness. Do you have what it takes to identify, implement and be successful with a new best practice? Will your efforts build in long-lasting resilience or simply sustain short-term viability?

Set the stage for best practice implementation that will lift your business into the next normal by embracing these eight traits of resilient distributors:

1. Audacity: Have the courage to change.

It all starts with courage. When you have the audacity to do something different to improve your business, all the other pieces fall into place. However, this first step is always the most difficult, even without the pressure the COVID-19 pandemic puts on the industry. Many distributors aren’t ready to take the risk and would rather wait until a competitor tries something or a major customer asks for it.

However, when you wait, you’re putting off essential progress and giving the competition a healthy head start. To find the courage and audacity to make the first move:

  • Network outside of your industry circle. Many distributors have been in business for decades and only network within their industry, limiting access to new ways of thinking.
  • Diversify your workforce. Diverse thought processes enhance collective thinking efforts. For instance, recent college graduates without distribution expertise will think outside of the box and ask difficult questions about your processes.
  • Interact with your customer-facing teams. Sales and marketing teams are closer to the customer. By collecting data at the point of sale, you can better anticipate demand and make bold decisions because you understand what customers value and need.
  • Forget the adage, “If it’s not broken, don’t fix it.” If it’s not broken today, either it’s likely to break in the next several months or you are not accepting that it’s broken now. Will you be able to fix it when it does break? Do you have the right people to help you? And will you lose profits and customers in the process?

2. Awareness and Alignment: Decide what the change will be.

Once you have the courage to make a change, decide what that change will be. Be careful not to implement simply for the sake of implementing. A model that works for another company may not work for yours. So, before you implement that inspiring pricing strategy you learned in a podcast or an inventory technology solution your competition has adopted, vet it for alignment. What worked for your competition may not work for you.

  • Match the right solution to fit the actual need. Develop an awareness of your current practices, company culture, and inefficiencies, then decide which change will have the greatest impact and align with your needs. Factor for the impact of events like the COVID-19 pandemic.
  • Don’t patch poor processes with technology. Technology seems like an easy, affordable solution to any problem. However, you must first identify why your processes aren’t working and how you can improve them. Only then can you align the right technology to fit.
  • Look within your organization. There may already be best practices at play that you can amplify. Since those practices are working for you, they’re already in alignment, and you can maximize results with less effort. For instance, you might replicate processes from your top-performing locations or sales professionals across your business. Begin by putting a process improvement team together.

3. Action: Execute using data.

This is all about data-driven execution. No two companies are the same and there is no one-size-fits-all for implementing best practices. When you’re ready to take action and make a change, use data to plan and model for that change. Using data removes emotions and guess work, and it will help you determine the right rollout process for your company.

For example, to plan for implementing pricing best practices, look at data around your current pricing. If pricing is up to sales professionals’ discretion, and there’s significant pricing variation for products that isn’t driven by differences between customers, you know you need to bring consistency to the process. One easy way to improve on this is to set your pricing based on customer groups. You can again use data to determine the best prices for your customers and products, and your salespeople can use that to make better, more meaningful decisions for the company. You might also implement stronger sales management and guidance for your sales team on acceptable profit margins.

4. Acceptance: Gain user buy-in.

Gaining user buy-in is essential. If you don’t have that, you could implement a great solution only to find your workforce doesn’t use it. You must create trust and belief among your workforce before they’ll accept a new approach. Here are two examples of how it could go:

a) You implement a best practice without champions or a change management agent, and without explaining your decision or its benefits to your workforce. You don’t consider how this new practice will fit into individuals’ workflows. In this case, you’re less likely to gain acceptance.

b) You enlist a team with representatives from each department to help determine the right best practice to pursue. After significant deliberation that accounts for workflows and outcomes, you collectively choose the best solution for your team. These representatives are now your champions, helping with change management, and everyone starts using it within 90 days.

Don’t underestimate the importance of buy-in. Your employees should know why you’ve chosen a specific practice, how to apply it effectively, and how it’s beneficial in their individual roles. Coach them progressively, taking a micro-learning approach, to avoid overload or reduced acceptance. And don’t forget how most of us think – WIIFM (What’s In It For Me?).

5. Accessibility: Commit to simplicity.

You’ve identified the right best practice, you have the buy-in of your workforce, and you should already have a plan to put it into play. That plan should be concise, consistent and actionable. Otherwise, employees won’t be able to execute on the practice – or sufficiently embrace it. To develop an effective implementation plan for your workforce:

  • Don’t aim for perfect. There is no such thing. Many companies lose time and momentum between engaging their employees with an idea and making that idea actionable for them.
  • Start with three. Three truly is a magic number when implementing new processes. If there are more than three tasks, the complexity can stifle adoption. If there is only one task, it won’t be a priority because it can be done any time. Three tasks are more actionable.
  • Consider workflow. Implementation shouldn’t involve detours from your employees’ workflow. Consider how they already work and integrate the practice into that. For instance, it shouldn’t take five steps to look up an answer to a customer’s pricing question while on the phone.

6. Application: Customize your solution.

Just as no two companies are the same, no two employees are the same. As you develop an implementation plan, consider the individuals involved:

  • How might they work best with the tool or practice? Employees might use it differently depending on their roles or preferred workflows.
  • What are their skills? Employees with different skill levels and types will need varied training and application.

What is their willingness level? Your newest employee may have a higher willingness to change than your most senior employee.

You must give people flexibility to use the system in the way that works best for them, rather than having a rigid process for everyone. This doesn’t mean you have to create 100 different process flows. Start with basic information and a simple process, and let it evolve. Over time, you’ll see who’s interacting with the information, how they’re interacting and how frequently. From there, you can customize processes and identify needs. How can you enhance it for the very active user? What does the inactive user need?

7. Agility: Respond to user feedback.

After initial implementation, agility will be key. However, agility here shouldn’t be entirely impromptu. Your careful planning and listening combined with your interactions on the change management team will have revealed potential process issues, questions and requests that your workforce might have in the first several months. To build agility into your best practice implementation, prepare ahead of time for various scenarios.

For instance, say you start your sales team off with three metrics they can use to make meaningful pricing decisions. After a few months, they might ask for more metrics to add even more context to their decisions and enrich their customer interactions. You should be ready to deploy those metrics to them, complete with execution plans and training.

Other scenarios that may require agility include:

  • Employees find the current process adds detours to their workflow
  • Employees can’t attain the intended results
  • Employees are overwhelmed by the process (ex: too many metrics)
  • Employees question why they achieved a certain result using a certain tool

8. Advancement: Cultivate a growth mindset.

Finally, you must have a corporate-growth mindset and continually seek process improvement. Today’s best practice is tomorrow’s common practice. For instance, your pricing strategy or customer segmentation model might have started as a printed-out Excel spreadsheet. From there, it may have evolved into a PDF, a digital scorecard, an iPad-accessible report and then into a report that can be conveniently accessed via a smartphone. How we use information is constantly evolving and changing, and you must stay vigilant to remain relevant and maintain engagement with core tools.

Embrace These Traits as a Foundation for Next Steps

You can’t afford to stay in best practice for all 47 best practices we’ve identified. The four that will have the greatest impact on your profitability are: inventory management, customer segmentation, pricing and supplier analytics. They’re also the most dynamic, and will change every day and every year, which means you’ll be well-positioned to leverage them to grow your bottom line no matter what the rest of 2020 throws at you.

Pradip Krishnadevarajan is co-founder of ActVantage, which helps distributors drive profitable growth through analytics. He has more than 15 years of experience helping hundreds of distributors while co-authoring seven books for the National Association of Wholesaler-Distributors. Before joining ActVantage, he co-founded the wholesale distribution-focused research lab at Texas A&M University’s Industrial Distribution Program. Reach him at pradip@actvantage.com or visit actvantage.com.

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