Yogi Berra, the Hall of Fame New York Yankees catcher, might be more famous for his nonsensical aphorisms than for the .285 batting average, 358 home runs and 13 World Series rings he accumulated in the 1940s, ’50s and ’60s. One of my favorite Yogisms:
“Ninety percent of the game is mental—the other half is physical.”
Why is that a favorite? Because my role here at NetSuite covers the wholesale distribution industry, and Yogi’s blithe remark describes wholesale distribution to a tee.
The physical movement of goods from manufacturers to warehouses to retailers and 3PL providers and end customers is a big part of the wholesale distribution business. But physical movement isn’t what makes or breaks wholesale distribution success. The differentiator for wholesale distribution excellence is mental—or, you could say strategic.
Simply marking up goods 5% or 10% no longer cuts it with wholesale distributors under increasing pressure from direct-to-consumer business, i.e., manufacturers selling directly to end customers at lower prices than wholesale distributors can support. Adapting to this competitive environment requires a strategic focus on four key requirements—1) efficiency and integration 2) inventory optimization 3) customer centricity and 4) innovation.
Efficiency and integration. Disparate systems for financials, ecommerce, order management, inventory and more undermine efficiency, costing time and money. Leading wholesale distributors are turning to a single cloud solution with industry-specific functionality that unifies commerce and business processes in a Commerce as a Service architecture. They can automate processes and streamline workflow between front and back ends and operate with real-time visibility into key metrics.
Inventory optimization. Knowing what stock is on hand, in which varieties where, is critical. Inventory optimization also lets you manage multiple warehouses and ship to customers from the nearest location, speed processes with advanced bin and lot management, and lay a foundation to analyze profitability by products and customers. And it aligns with demand planning, ranked the #1 most important strategy for inventory management by wholesale distributors surveyed for NetSuite’s Outlook for Wholesale Distribution in 2012 (opens in new tab) report.
Customer centricity. Growing pressure from manufacturers and customers ups the ante for wholesale distributors to understand customer activity at a granular level and adapt pricing, products and service accordingly. Wholesale distributors can also gain a critical edge by analyzing customer lifetime value and understanding costs associated with each customer for support, returns and shipping. A single view of all customer transactions and interactions is key to making customer centricity a reality.
Innovation and value add. The way for wholesale distributors to protect margins is to look beyond margins, to where they can add value in the supply network through educational resources, social exchanges, rich web experiences and enhanced service. Look to elevate your B2B web experience to resemble a leading B2C site like Amazon or Apple with such features as personalized product recommendations, product configurators, and ratings and reviews.
Leading wholesale distributors are making the move to sharpen their strategic game. From a technology perspective, ecommerce, cloud (SaaS) computing and CRM were the top technologies under consideration among wholesale distributors in our recent survey (opens in new tab). Is your wholesale distribution business deliberating on whether to revamp its strategic focus and technology infrastructure? Consider Yogi’s advice: “When you come to a fork in the road, take it.”
-Roman Bukary - AVP of Manufacturing and Wholesale & Distribution
