Distributors need to define strategy in terms of closing gaps with the market rather than operational weaknesses, according to the authors of Value Creation Strategies for Wholesaler-Distributors. After reading an excerpt of the book on our sister site, MDM.com, I couldn’t agree more wholeheartedly.
Authors Steve Deist, Michael Emerson and Mike Marks explain how the study of best practices is now widespread and has contributed to significant productivity improvements by wholesaler-distributors across all lines of trade. By emulating high-performing organizations' processes, companies how to reproduce their productivity successes.
“One of the most beguiling aspects of a best practices approach is that it offers a straight path to the solution without detouring to examine underlying assumptions, market forces, or organizational problems. Our research indicates that wholesaler-distributors are especially susceptible to this enticement. Their culture of responsiveness can make them impatient and skeptical of overly complex analysis,” the authors write.
What gets lost in the mix? “Based on a sample of current and past projects undertaken by many companies, more than two-thirds of major wholesaler-distributor process improvement initiatives are driven by tactical considerations instead of closing market gaps,” they note.
I encourage you to read the excerpt for specific examples of these oversights in the excerpt on MDM.com.
You will see that most distribution companies share a similar methodology:
- determining strategic priorities based on a genuine understanding of customers' economic drivers
- identify the critical few elements for success
- align the company behind these necessary changes
Sounds simple, right? But Deist, Emerson and Marks explain, “Few executives interviewed for this book explained their approach to us in these terms. From their market-driven perspective, they simply sensed a need in the market and reacted forcefully. Every company has a limited number of employees to devote to improvement projects, limited financial resources, and limited executive bandwidth. Any investment in noncritical areas represents an investment that is not made in critical areas. The strategic approach is the best method that we have found for identifying those few critical areas.”
If you’re ready to think differently about a strategic approach to closing market gaps, IMI Data can help. Our data solutions give your distribution company the advantage in identifying new markets, new regions and new strategies for expanding product lines. Learn more when youdownload the IMI Data Brochure.