MDM-Podcasts-launch
Need Help? (888) 742-5060

In The News:

Help Your Customers See Better

To understand the state of procurement in 2018, read Deloitte’s new Global Chief Procurement Officer Survey 2018. The survey (more than 500 procurement managers across 39 countries and combined annual revenues of $5.5 trillion) points to gaps distributors can leverage. Let’s connect a few bullet points from the overall poll:

  • Two-thirds of procurement leaders have limited or no visibility into their supply chain beyond tier 1 suppliers.
  • Fifty-one percent of procurement leaders think their current teams do not have sufficient levels of skills and capabilities to deliver on their procurement strategy. That’s actually a significant improvement over last year’s survey where 60 percent thought their teams were ill-equipped to deliver on their strategy.
  • Analytics is expected to have the most impact on procurement in the next two years.

The survey results point to the normal things you’d expect: cost reduction, risk management and new products/market development remain the top business concerns of procurement leaders. But the nuggets are in the bullets above. They tell me procurement managers are looking to analytics as the major tool and catalyst for how they are going to fix their blind spots and skills deficiencies that are increasingly exposed by digital transparency.

The survey also tells me that, while pundits talk about how wholesale distributors are changing at a glacial pace, customer procurement organizations are not on the bleeding edge of digital change either.

But the rest of the message is that procurement will change rapidly over the next three to five years as we see leaps and bounds in the digital network infrastructure and use of analytics. For example, how many of us even heard of blockchain a year ago, or its potential to significantly shift supply chain networks? (More on blockchain in MDM soon.)

Deloitte identifies these implications from the research:

  • “Many organizations are leaving themselves exposed to potential supply chain disruption and margin erosion by having limited visibility in their supply chains beyond the first tier. Improved transparency of pricing, supplier locations, and critical dependencies can help procurement functions deliver greater value.”
  • “Digital supply networks are evolving, connecting all parts of the supply chain, and insight-driven organizations are applying advanced analytical capabilities to enhance performance. Digital transformation is inevitable and high-performing organizations are leading the way on adoption.”

If ever an opportunity dropped in the lap of distributors, I can’t think of a bigger one in the face of so much channel disruption today. Nor a bigger threat.

Supplier collaboration and relationships are under fire, with the report citing their declining value in the eyes of procurement leaders. The combination of pricing transparency and digital sourcing options (with Amazon Business as an emerging core driving factor) presents both a threat and an opportunity to the traditional value propositions distributors have offered customers.

You could argue the survey insights provide some context for Grainger’s 2017 web pricing strategy (read the MDM special report: Grainger’s Web Pricing Initiative). They have been the most proactive and visible in their repositioning.

This survey, in its the seventh year, parallels many trends our research team has identified over the past 12 months at both distributor and customer levels. Early adopters – traditional and new – across the entire channel are leveraging a digital and analytics gap, disrupting their own models proactively. In the process they are gaining efficiency, cost and competitive advantages.

How will you leverage analytics to help your customers get better visibility and insight into an increasingly transparent marketplace?

© 2019 Gale Media, Inc.

Please do not reprint MDM's content on your website without MDM's express permission as it is copyrighted material. To gain permission, email us, or call 1-888-742-5060. For information on PDF or print reprints, visit www.mdm.com/reprints. MDM welcomes inbound links from your site. Please cite Modern Distribution Management.

2018-top-distributors-listThe 2018 Top Distributors List

This free PDF includes lists of top distribution companies across 14 sectors.

You will also receive MDM Update, our daily distribution e-newsletter & other distribution-focused content.

Download the Free PDF now >>


MDM-UpdateMDM Update: Daily Newsletter 

Sign up to read the best source for news & trends in wholesale distribution, MDM Update. Delivered daily to your inbox. 

Sign-up for MDM Update >>

Post a comment to this article

Partner Center