This is a part of the 2014 Distribution Trends Report. The annual report was researched and written by MDM editors based on interviews with dozens of wholesaler-distributors, as well as industry experts and manufacturers. MDM also conducted a survey of its readers to uncover the trends outlined in this report.
2014 Distribution Trends Report
This article is a part of MDM’s 2014 Distribution Trends Report. The article analyzes the shifting role of analytics in the wholesale distribution industry, including the demand for cleaner data and interactive dashboards.
Demand for more data from all levels of business continues to increase as distributors see returns from engaging in analytics. But as distributors compile more and more data, the challenge of identifying what to do with it also continues to grow.
“[Analytics] is definitely a growing interest in business as you learn just how much information you have and we begin to see what we can glean from analyzing that information in different ways,” says Phil Derrow, president and CEO of Ohio Transmission Corp., Columbus, OH. “There’s a lot to learn and a lot that we can use to help serve our customers better; help target our activities better, manage our resources better and just run a better business.”
The problem: “Most people don’t know what to do with the data, charts and spreadsheets they already have,” wrote one respondent to a recent MDM survey. “They just need to know what action they should take next.”
“The question is, how much data do you need to be productive with analytics, and can you drill through the analytics to get to the heart of the data that you’re trying to work on?” says Andy Berry, vice president of sales, wholesale distribution and equipment at Infor. The lack of clean, complete data is one of the biggest challenges for distributors. “I think data analytics is going to be a big, big part of our future. We’re starting to really dig into big data and gaining insights, but we’ve got a lot more to do… You constantly have to be improving the accuracy of your data,” says Joseph Nettemeyer, president and CEO, Valin Corp., San Jose, CA.
Even when companies recognize the need to clean up their data, many try to do too much all at once, says Jonathan Bein, managing partner of Real Results Marketing, Boulder, CO, which can quickly becoming an overwhelming and costly project.
“There’s a learning curve, and some of them try to start with boil-the-ocean projects like master data management projects, when instead they maybe should be focused on cleaning up two parts of data: your customer data and your product data,” Bein says. “And that’s going to give you some large percentage of the value of doing the master data management project for a fraction of the cost.”
Even clean data can be overwhelming, simply because there is so much of it. Distributors are also looking for their data to be less static. “We’re really seeing a strong push, not just for pushing reports out there, but really pushing an interactive way to look at the data,” Berry says.
While everyone agrees that this data needs to be accessible, what isn’t agreed on is how people want to see the data, says Russ Mellott, senior vice president of sales for Epicor. Everyone wants transparency and speed, but a lot of work still needs to be done on how to provide the right information to the right people.
The use of dashboards, or software interfaces that display data that the distributor deems relevant, is increasing in the industry to address this challenge. These dashboards “try to make the information insightful – instead of data – and make it device-relevant,” says Floyd Miller, CEO of SupplyPro, San Diego, CA.
Dashboards can also be custom-tailored for different segments of a business, creating more applicable data for each specific user within the company.
“We are in the process of completing a project to have internal dashboards that reach all the way down to the inside sales force and outside sales force. [Salespeople] will have financial and operational dashboards that are custom tailored to their performance,” says David Parks, executive vice president of Hydradyne LLC, Fort Worth, TX. “So if you’re an inside salesperson, you’ll be able to go into the network and see all of the metrics that apply directly to you.”
Dashboards also provide a real-time window into the status of the business. “A CEO doesn’t want to have to log on to an ERP system to see how his business is running, nor does he want to have to wait until the end of the month to figure it out,” Berry says.
Apart from how the data is presented, distributors are using analytics to analyze customer data and assist with customer segmentation.
“The next step in the analytics process is to say, ‘Why am I making money with these customers, and why am I not making money with these customers?’” says Brent Grover of Evergreen Consulting. After that, they can answer the question: What can I do about it?
By knowing your customers well, you can better deploy your sales force efforts to maximize profitability, says Don Schalk, president and COO of specialty building materials distributor C.H. Briggs Company, Reading, PA.
“We have worked for several years with Texas A&M on customer stratification and understanding which customers are our most profitable and most important customers, which helps us better direct our sales force to better opportunity,” he says.
Diving deeper into customer data can also help uncover potential. “We are doing a lot more research on customer trends, and we can mine our own data to uncover gaps,” says Bill Mansfield, senior vice president of sales and marketing at Graybar, St. Louis, MO.
Effective customer data can also help the customers themselves, if a distributor is willing to use that data to improve the customer’s experience.
“We’re always looking at product categories. We’re always looking at how things are used. We’re having those meetings with the customers and making sure that we’re giving them the information they need to make good decisions in their business,” says Matt Cohen, president of Replenex, Eden Prairie, MN.
“Business intelligence and analytics is the answer to the business improvement process,” says Bill Scheller, CEO of BlackHawk Industrial, Broken Arrow, OK.