Distribution and Analytics: the Foundation for Better Decision Making
Published on by Bryan Gayhart in Consulting, Wholesale / Distribution
It’s safe to say that in the past twelve to sixteen months, many wholesalers and distributors were forced to change how their businesses operated. Maybe the COVID-19 pandemic forced you reduce costs. Maybe it forced you to raise prices in response to price increases from suppliers and logistics providers. Or maybe it forced you to change the way you manage your inventory.
Whatever the situation may be, the COVID-19 pandemic brought about many significant changes to wholesalers and distributors. Where this gets interesting is comparing how were these decisions made, and how were the resulting changes implemented? Often neglected is the use of data analytics as a catalyst to make better decisions. Below we focus on four key analytics to help drive profitable growth:
- Customer Stratification – This involves using transaction data to segment customers into micro clusters based on buying behavior. The end result is improved customer relations, optimization of the sales team and more accurate pricing.
- Pricing Optimization – This means using transaction data to detect pricing opportunities at the customer-item-channel level. Pricing optimization can be complex given the volume of data and variables, but the benefit is this data is readily available. When put to work the result is an easy to implement pricing framework, a cost to serve model and a game plan for moving customers to an appropriate profit zone.
- Supplier Stratification – This is the practice of using purchasing data to segment suppliers based on spend, channel alignment, supply chain performance and profitability. Supplier stratification will shed light on suppliers who cause your business to incur additional working capital due to delivery inefficiencies. It will also provide insights into opportunities for strategic partnerships.
- Inventory Stratification – This includes classifying items into micro clusters based on customers’ buying behavior such as profitability, logistics, criticality, or any other criteria. Inventory stratification provides buyers and purchasing teams with a foundation for making day to day decisions. As a result you’ll be able to manage item level profitability, right size inventory investments, reduce obsolescence and maximize ROI on inventory.
Additional Resources
Join Network for Business Innovation CEO Mark Dancer on September 28 as he shares insights about the future of distribution, breaks down the key trends shaping the industry, and offers examples and ideas in an interactive virtual event. Learn more and register here.
Have questions about getting started with leveraging analytics in your business? Talk to one of our Barnes Dennig wholesale distribution industry experts, or call us at 513-241-8313 to ensure your business is successfully transforming in the wholesale distribution landscape. We’re here to help.
