How the distributors manage coronavirus-induced disruptions will affect their businesses in the long-run. It is especially true for the best distribution companies that are poised to exploit business recovery when the economy starts to become more active. There exist uncertainties about the schedule for changes concerning the patterns of demand, supply, sales, and distribution. Despite each of the challenges, there exist lessons and chances around important actions that proactive distribution businesses are taking presently. Shared below are some of the action areas that are causing a change for those proactive companies.
Distribution industry experts feel that the best distribution companies that choose to reposition their businesses will become leaders in this sector. The following actions are likely to play a part in the repositioning process.
Actions Associated With Revenue
When they brainstorm which revenue-boosting changes to make, distributors look at challenges like considerable inventory scarcity for top-selling goods. Some distribution industry experts recommend talking to suppliers regarding carrying goods that can fulfill margin and revenue requirements to become valid alternatives to certain sought-after items.
In the difficult COVID-19 period, there exists a difference in the so-called ‘product mix’. So, those experts suggest shifting both distribution business resources and focus to slightly more predictable categories of products with more availability. To tackle the increasing demand and even the stocking up behavior from certain customers, distributors now seek ways of dispersing goods to a wider audience. They are looking to do this with enterprise resource planning (ERP) software, to handle distribution and track product mix to serve more customers at a greater level.
Some distributors seek solutions to make an online order portal for people who cannot collect products from physical counters. Experts think that today’s distribution can start at that point instead of interacting with a fully-developed ecommerce deployment service. Distributors may look at product mix, use a tiered pricing system according to customer segments, and adjust rates to be in line with product availability.
Actions Related To Suppliers
Distributors should analyze their supplier mix. This analysis should involve determining where to get top goods in the present and the future, as well as, whether distributors should make changes. Be open to changing product sources based on supplier performance. It is also important to look at whether your small distribution business, sources goods from around the world. Contemplate whether it is possible to find those international goods from a nearer place, or consider sourcing from different suppliers to deal with delays or risks.
When it comes to sales incentives to vendors, we would recommend evaluating present limits based on current realities. Update the minimums to be capable of retaining your vendor investment in the form of a piece of your sales pie.
Actions Associated With Inventory
To optimize merchandise, we would recommend reviewing your existing stock levels and your approach towards demand planning. Discover which goods are taking more time to be sold versus the ones with increased demand because of the epidemic. Review recent customer demand information, and think about implementing a process of approval for inventory replenishment rules.
Try to know what customers plan to purchase and sellers intend to trade in the coming months, and update the inventory targets of yours accordingly. Explore chances to negotiate excess stock returns to sellers, or exploit a program of vendor stock consignment. Many times, distributors continue to use the same trigger levels and target levels for a period of between 5 and 10 years. According to distribution industry experts, this is the right time to look at these levels.
Remote Work And Social Distancing
Several customers continue to follow social distancing norms and therefore, keep implementing policies that restrict people at their storage locations. Consequently, many distributors are delivering a higher number of products while experiencing a corresponding reduction in people who appear to collect orders. To compensate, distribution businesses now include express shipping options in their ERP software programs for faster and more effective shipments. Some distributors are also relying on locker systems to limit pickup that involves physical contact.
Distributors discover ways to streamline truck deliveries with access to mobile enterprise resource planning software, which offers drivers delivery instructions, and captures delivery notes and proof of product delivery. These are only some of the best practices in the distribution business about social distancing. Distributors are also taking the most effective courses of action for remote workers.
For their home-based workers, many distributors are relying on cloud technology to enable these employees to access their networks securely. This way, workers with ‘superuser’ privileges are training their colleagues who lack knowledge about this remote functionality. For your information, the term ‘superuser’ here refers to a computer network account that has levels of privileges that exceed those of almost every user account.
We hope that you have got a rough idea of how the distributors are striving through, even during this unexpected pandemic situation that is nothing but chaos!