Commentary: MDM Trends Reveal Opportunities - Modern Distribution Management

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Commentary: MDM Trends Reveal Opportunities

Competitive gaps emerge from shifting customer patterns.

This June double issue is a critical benchmarking tool, combined with our annual update of the largest wholesale distribution companies across 15 product sectors. Our research in 2014 identifies areas where significant competitive gaps are emerging, largely driven by shifting customer patterns and demands.

And as in past years, our findings are more about degree of adoption or acceleration than a magic-bullet type of disruptive force. The key 2014 trends reviewed include inventory management, e-commerce, analytics and human resources.

Any time you try to form absolutes around trends in wholesale distribution, the one absolute I have ever found to be true echoes an important reminder: Wholesale distribution continues to be highly fragmented at every level of the supply chain in spite of consolidation waves. This absolute can be a strength, weakness, opportunity and threat at the same time; it is critical for distributors to identify what that looks like for them in 2014.

The real value in trend analysis is to benchmark against not only direct competitors, but across industry sectors and even outside business models. This last point, I might argue, is perhaps the most important emerging trend executives should note.

The traditional distribution functions of carrying inventory, demand creation and credit are being challenged in 2014 like never before, and AmazonSupply is just the most visible potential threat among many. In addition to emerging e-commerce alternatives, traditional distributors are expanding into new end-markets with broader product offerings. Start-up specialized distribution models are emerging with streamlined inventory, infrastructure and sales costs.

While some traditional distribution companies have redesigned their economic value models, many more still operate fundamentally the same way as 10 or 20 years ago. These companies are most at risk from competitors that are building more efficient cost and service models that customers value.

The emerging trends identified in this issue offer ways to evaluate their impact, as a threat, opportunity or both.

We feel this annual update is an important measure of how market leaders are creating competitive advantage. More importantly, it indicates areas your company can benchmark to strengthen your market position.

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