Digitising distribution: the path to unlocking value
If distributors want to keep creating value, they must harness digital.
Amazon hopes to start drone deliveries in a matter of months. Ford is developing Digit, a two-legged delivery robot. ASRS (automated storage and retrieval system) warehouses are no longer science fiction. These are just the cutting edge examples of how distribution is changing. If you're in the distribution business, this is no time to be complacent.
"The impact of digital technologies on distribution is staggering," says Rakesh Parbhoo, CEO at Westcon-Comstor Sub-Saharan Africa. "But it's not a surprise when you look at the problems being solved. Distributors have always been looking for faster and more efficient ways to move goods and services. In the past, they got stuck at many practical barriers. But digital systems have toppled those and now we're seeing an explosion in innovation around distribution systems."
It doesn't require bleeding-edge technologies to be a part of this change. Investing in autonomous robots and drone fleets is still best left to the mavericks of the industry. But they didn't get there overnight. Instead, they have been leveraging new technologies for quite a while now. Amazon's drones will be of limited worth if it hadn't also introduced features such as automated addressing and RFID tracking.
Today's distributors can take advantage of those breakthroughs, which are by now much more tried-and-tested technologies. Services such as robotic process automation (a fairly simple way to automate routine human input tasks), mobile scanning devices and advanced analytics are all within reach of any distributor keen to advance their operations.
But the first step towards digitally enabling your distribution environment is not to go and buy these technologies, Parbhoo explains:
"Digital enablement is not just procurement and provisioning, but how it enables you to succeed. It requires a vision for the future of the business and a strategy that can make that happen. It also requires a culture that embraces constant development. Finally, you need to invest in self-help tools that support your employees and their roles, as well as empower your customers to be a part of the transaction."
The digital difference
Digital distribution has become the moniker for how that industry is transforming itself. At least, the players in that industry that want to transform. For the laggards, the writing on the wall is increasingly apparent:
"Distribution is at a crossroad. The industry, the consumer and the products we move are becoming more digitally centric. Distribution itself needs to act quickly and embrace digitalisation or miss a huge opportunity. It's no longer about moving goods - everyone can do that. The differentiator is about the value being generated. Anyone who moves a product from A to B and carries a brand logo in their presentation markets themselves as a value-added distributor. I don't think there is anyone in this space who doesn't believe they are ‘value-adding'."
That value is determined by the capabilities provided through digital distribution. For example, same-day delivery of goods or the seamless return of faulty products are major value contributors. So is automating parts of the supply chain: mobile scanners reduce errors and speed up employee actions, thus saving time and boosting capacity.
Start feeding such data into analytics and a new world of planning and prediction opens up. The concepts of real-time supply chains, just-in-time stock management and developing new services for customers become reality.
Establishing digital distribution
If the possibilities are so great, why do so many distributors still resist change? It requires some major shifts inside the organisation itself. This is risky and fraught with unseen challenges. So many instead do nothing, even though it's certain to make their businesses obsolete. But their fears are overstated, says Parbhoo:
"Digital distribution does not entail throwing out the old and basing your business on a ‘born in the cloud' model. It goes without saying that some products are volume, run-rate and focussed on breadth while other products require commitment from the distributor and the reseller. This type of transformation requires more than technology. It needs a stable partner who can understand the business, then offer advice and support to navigate around difficult areas."
Distributors are benefiting immensely from digitisation and some of the most cutting-edge developments come from this exciting sector. But you don't have to go all-in to see those benefits, you just need the right partner for your distribution business to start creating value like never before.