In the latest edition of the highly influential series, Facing the Forces of Change, The National Association of Wholesaler-Distributors (NAW) discusses various disruptions facing those in the Wholesale and Distribution industries. In a prior post, we took a macro-level view of the whole study. Here, we will take a brief look at the six main forces that are currently converging on the industry landscape: Business, Process, People, Technology, Mergers and Acquisitions, and Government Regulations.

Business Disruption

What It Is: From Amazon to Walmart, to Airbnb, business disruption can come from known competitors who change their geographic reach or expand their services, or it can come from new businesses who change the way your customers do business.

What You Can Do: Learn from disrupters. One example is Uber’s “Rate the Driver/Passenger” feature. This practice elicits feedback in a non-invasive manner on a transaction-by-transaction basis. Such information could be very powerful to your business’s ability to respond to customer expectations while achieving and maintaining a high reputation and customer loyalty.

Ask Yourself: Do we look at the way we do business through the lens of the customer, as they see us? What is the most lucrative part of our business and how are we defending it against disrupters?

Process Disruption

What It Is: This occurs when someone from inside or outside the supply channels alters how business is done.

What You Can Do: One form of process disruption is for a supplier to go directly to a customer. This is known as disintermediating the channel. Another form is for a distributor to begin offering services, in addition to products. Distributors could assume responsibility for keeping supplies at certain levels, thereby relieving their customer of the burden and assisting their efficiency. This could cause disruption to your competitors, strengthen the relationship with customers, and add a new revenue stream for your business.

Ask Yourself: Do our service offerings offer competitive differentiation? Can we quantify these services in monetary terms? Are we measuring this value and how often do we communicate this value to our customers?

People Disruption

What It Is: As Baby Boomers retire across the industry, they take with them long standing relationships and hard-earned knowledge in terms of how business is done. As Millennials move into greater prominence, their comfort with technology is shifting market expectations. The expectation is increasing to do business whenever and wherever, with any device, and on an enjoyable app.

What You Can Do: Integrate technology into various practices and provide open, and easily accessible channels of communication with your customers through the various technology alternatives. In addition, Millennials as employees have different expectations. Implementing Employee Listening Programs (ELPs) can have a large, positive impact on employee satisfaction and productivity.

Ask Yourself: If a sales rep leaves and joins a competitor, how much of the book of business is he or she likely to take?

Technology Disruption

What It Is: We have all experienced the near-continuous disruption of technology for some time now, both in business and in our personal lives. When it comes to the wholesale distribution industry, we need to focus on two main areas: 1) technology advances in products and materials, and 2) hardware and software that could change entire business models.

What You Can Do: Responding to this disruption calls for constant vigilance. Implement regular processes to survey your range products and services for technology advances. If you are engaging regularly with your customers and eliciting feedback, connect what you learn with your technology strategy. Anticipating and meeting clients’ needs in ways they don’t even expect can be a powerful disruption in your marketplace – one that you have initiated.

Ask Yourself: Can we leverage technology to evaluate customers on the cost of doing business with them? Can we measure truck wait and unloading times, returns, the number of phone calls for help with product installation, and repetition of identical questions?

Mergers & Acquisitions

What It Is: Over the last five years, consolidations have been occurring at a high pace. This trend is expected to continue. These mergers and acquisitions can alter the competitive landscape in which your business operates by introducing new competitors into your geographic region or changing the mix of products and services your competitors are able to offer.

What You Can Do: Consider using M&A activity to acquire specific capabilities that provide differentiation from your competition. In some instances, the acquired capability is no longer sold to competitors but kept in-house as a competitive advantage.

Ask Yourself: What are we not selling to our customers? Can we preclude them from purchasing elsewhere, thereby increasing our wallet share?

Government Regulations

What It Is: New regulations can present compliance challenges and change the way the marketplace operates. These changes can affect the whole supply chain.

What You Can Do: Turn compliance into a service offering. Be first-in-line to offer documentation or regulation-compliant products or procedures to help assist customers in their compliance efforts. Healthcare, Automakers, and other manufacturing customers can benefit by having their compliance burden lifted by conscientious wholesale distributors.

Ask Yourself: Are we sufficiently aware of the compliance burdens of our customers? Are there competencies that we can develop once, and then offer as a service for multiple customers, such as proof of food safety, carbon emissions, or municipal-specific specifications?

As was mentioned at the outset, this blog can’t hope to exhaustively cover each area of the NAW’s study. However, this will hopefully serve as a useful tool to dive deeper, and more fruitfully, into strategic discussions as you navigate these seas of disruption. Big changes are coming. The only question is whether these changes will be dictated to you, or whether you will take the initiative and cause the disruption yourself. Be bold. BE the change!

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If you have any additional questions or would like to discuss the Facing the Forces of Change: 6 Disrupters at Work Today more in depth, please contact a Barnes Dennig representative here.