4 Trends Driving Growth in the Wholesale Distribution Industry

In the changing landscape of wholesale distribution, businesses are faced with further complications to already complex supply chain management systems. Because distribution spans many large market segments, ranging anywhere from grocery and food-service to industrial cleaning equipment and home furnishings, these changes impact the growth of nearly every industry. To make sure your business is taking advantage of this growth opportunity, take a look at these four key trends that wholesale businesses are keeping tabs on: 

1. Investment in Technology:

The majority of distribution managers are beginning to realize the importance of making data-driven business decisions. This being said, many companies are currently struggling with adopting and implementing newer technology and software solutions. They are stuck with older software systems which are not providing relevant information in a timely and effective manner. The main reason for this is the unwillingness of distribution managers to implement costly solutions they think will not have an immediate impact in optimizing results across all verticals.

As a result, the focus of the industry has shifted to implementing integrated software that will tie the different facets of the business together (for example - order taking to warehouse management to accounting). Companies who move in this direction experience a myriad of benefits. For example, being fitted with a system that provides real-time information across departments in a timely manner to facilitate effective decision making. A salesperson on the road usually requires remote access to updated pricing, product availability, and customer information among other pieces of information. This highlights the importance of a system that provides data to all silos of a wholesale organization, be it in the warehouse or on the road at a customer’s location.

 

2. Focus on the Basics:

Recently, there has been a lot of emphasis placed on technology investment in an attempt to allow distribution managers to take a holistic approach in assessing their current operations. Investment in an inventory management and accounting ERP system is now a critical part of planning and optimization. And given the broad range of existing products on the market, it is not a decision that should be made impulsively or quickly. A long and detailed search process and product comparison is usually required before any decision is made. Most companies, at the beginning of this process, try to assess their organizational strengths and deficiencies to determine how new software will and should affect this. Taking a well-rounded look at a business allows distribution managers to ensure they are meeting the basic needs of their clients, prior to investing in technology.

 

3. Integration between eCommerce and Back End Functionality:

Customers are increasingly looking for a multi-channel experience that will provide relevant and accessible information throughout the duration of the buying process. The result of this is that online shopping has become a critical component of many successful business models. This is because it provides customers with easy access to a wide variety of products. What many distribution managers have learned is that an impressive online store-front is very important.

Having said this, the back end inventory management system is equally critical to ensure customers are satisfied with their shopping experience. An intuitive and secure back end system has the ability to streamline a company’s processes through the provision of real-time inventory information as well as allocating inventory to specific orders. All of this ensures that a customer receives their shipment without any complications.

To achieve such smooth integration between front end and back end, it is necessary to invest in different types of technologies to improve organizational efficiencies. This technology can come in the form of an inventory management system or an eCommerce platform since these have become major considerations of distribution managers. Use of high-level assessments of the business model helps to ensure that distributors are meeting the basics needs of customers.

As part of this strategy, many distribution managers turn to outsourcing to meet supply chain and distribution demands for resources across the chain. More organizations are expected to start using manufacturers overseas in an attempt to reduce production costs.

 

4. Coping with Complexity

As the cloud transition accelerates, costs continue to be a huge driver to the cloud for those organizations that are still running legacy applications. This allows wholesale businesses to meet the challenge of infrastructure, maintenance, and labour cost management. Four out of five buyers are looking to the cloud simply because they don’t want to deal with the additional layers of responsibility and risk. Many organizations are transitioning to the cloud due to an aging workforce as well.

This increased strain on process management is adding more levels of complexity to the supply chain and warehousing industries. Simplifying information and breaking it down into easily digestible packets will become a major need and driver for creative thinking within the sector. Wholesale businesses are moving away from industry-standard guidebooks to the more user-friendly format of videos, tutorials, audio podcasts, and quick guides in order to break down the complexity of each subject and make it easily understandable for consumers.

Ultimately, the end goal is for full integration of all systems. This is likely result in lower tolerance for cost and time in realizing this need. Such a collaborative orientation will drive more wholesale and distribution businesses toward Platform as a Service (PaaS) offerings, where they have pieces of a platform rather than dealing with systems as separate entities. This shift will require additional understanding of how they all work together.

With Electronic Data Interchange remaining an important trend, more organizations will have to adopt EDI to stay compliant with their vendors. This will result in more partnerships occurring to embed EDI in applications, allowing distribution and wholesale businesses to support an Omni channel environment with real-time demand fulfillment and provide a single, unified customer experience across all channels. And since Omni channel is set to become the de facto approach to market, inventory optimization will take on greater importance, as product availability and timely fulfillment become essential across all channels of the supply chain.

For those wholesale distributors ready to embrace these trends, the return on investment will be exponential.  Find out how AMMEX supports wholesale distributors in developing and growing  their businesses.

 

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