This is a part of the 2017 Distribution Trends Special Issue. The annual feature was researched and written by MDM based on interviews with dozens of distributors, industry experts and manufacturers. MDM also conducted a survey of its readers to uncover the trends outlined in this issue.
2017 Distribution Trends Special Issue
While data-sharing among distributors and their supply channel partners has been discussed for years, new technologies and skillsets have increased the usability of even more data. As a result, respondents to the recent MDM market trends survey noted an increase in requests for data-sharing up and down the supply chain.
Customers want more access to information, primarily around their accounts and technical information on the products they purchase. Suppliers want more data on how distributors are building markets and providing value.
“You’re going to be forced to technology to prove your value to your customer,” says Steve Slater, COO, Stellar Industrial Supply, Tacoma, WA. “Everybody – the supplier and the customer – is going to have to see the data in electronic form that’s going to prove what you’re doing; otherwise, you’re going to be out.”
Providing more for customers around data is critical for differentiation, according to Burt Schraga, CEO, Bell Electrical Supply, Santa Clara, CA. “We want to be known as the easier distributor to do business with. That’s the way we can win.”
Data can create an opportunity to improve the value you provide to customers, but it can also increase the burden on your teams.
“Sometimes we have better data than our customers do, and it’s a double-edged sword,” says Henry Looney, president, United Central Industrial Supply, Bristol, TN. “It’s a privilege, but at the end of day they’re asking for more data requirements or running for more consumption daily. They’re trying to manage their businesses and they’re saying, ‘What are your daily transactions?’ and ‘How can you help us avoid cost?’ You have to provide the data for everything, even warehouse logistics, such as adding more items to make their barcode process quicker, faster, better.”
Customers are getting savvier about their own systems and requesting more complete purchasing histories that include product categorization and purchase location, says Jayson Keever, vice president supply chain & marketing, National Concrete Associates, Toronto, ON. “Everyone’s chasing the same thing – to drive efficiency. It’s an opportunity for the people who embrace technology to come out ahead.”
In a recent MDM-Baird Distribution Survey, nearly half (49 percent) of respondents said they were already sharing some point-of-sale data with their suppliers. For some, it’s simply a requirement of doing business with those suppliers. For others, though, sharing that type of data helps build a better partnership.
The same applies for other types of data.
“As we’ve grown and gotten better and more interactive with our suppliers, we’re able to give them supplier quality report cards,” says Michael DeCata, president and CEO, Lawson Products, Chicago, IL. “We’re able to give them better feedback. We’re able to work more collaboratively with our suppliers. If anything, our relationships with our suppliers have gotten better and stronger, more constructive and we have become more valuable to them as a channel to market. … Providing data is one more way of proving the connection between us.”
But the relationship has to be on a solid foundation to begin with. The data needs to flow up and down the supply chain. Of the respondents to the MDM-Baird Distribution Survey who don’t provide POS information to suppliers, one of the most common reasons was a desire to protect customer information from perceived misuse by those suppliers.
“We have the view that we own the customer, not the supplier,” noted one respondent.
“There are suppliers that are very interested in understanding your market so that they can kind of drive things more from their end,” says Katie Powell, vice president, Munro Cos., Grand Junction, CO. “This is where you sometimes end up with that distribution squeeze-out, where the vendor or supplier wants to drive the market direct to the end user. So they really want to understand us. But that’s where we feel distribution has value: We understand our local market, and we can drive up to the end user or to our customer.”
As demand for more and better data grows, clearly defining the value you bring to the supply chain becomes more critical. Distribution isn’t just about moving product anymore. “Sales that are more transactional in nature – that activity is more likely to be automated. But the sales rep who is consultative, who is adding value, that’s not as easy to automate,” DeCata says.