Distributors Can't Afford Legacy Systems
Understanding that the technology trends are changing, many distribution companies are beginning to realize that keeping ahead of the technology curve will likely require more than the excellent product knowledge and impeccable customer service they have provided in the past. Pushing ahead, distributors are beginning to explore, as well as implement, advancing technology while remaining aware of the fact that not every technology available makes sense to their business or their customers. Although not every technology is prime for distribution adaptation, there are some conventional and unconventional sources of technology that could improve a distributor's bottom line, as well as their customers' overall experience and satisfaction. Here are some tips and technologies for distributors to consider as they reach for the next level of business.
WEBSITES ARE MANDATORYIt's been said and suggested in many ways before, but the fact is, if a distributor doesn't have a website, their chances of future survival decrease exponentially as time progresses. The decline doesn't happen instantly, but as the current generation of customers heads toward retirement, the generation behind them won't be as likely to find the distributor due to the fact that they rarely search for information in any place but online. For the generation behind them, if a company isn't online, in essence, it doesn't exist.
INTERFACES MUST ADVANCEBeing armed with a website is the first step. Using that website to do more than communicate contact information and the company's vision is the next step. A distributor may be wise to consider its website as a customer interface and not as an enhanced Yellow Pages entry or advertisement. Web 2.0, smartphones, and touch screens have changed how the bulk of consumers interface with a company. Phone calls and hand-written orders don't seem to be as highly demanded as online order forms and interactive product catalogs begin to take over.
"A great many wholesaler-distributors continue to operate with fragmented, legacy systems that are unable to keep pace with the demands placed on them by customers, suppliers, and supply chains. This dynamic must change if distributors hope to carve out a truly value-added, differentiating role in the supply chain," said Guy Blisset, wholesale distribution lead at IBM, and author of Facing the Forces of Change(r): Decisive Actions for an Uncertain Economy. He devoted an entire chapter of this research report to the influence that information technology (IT) has on the success of distributors and their ability to advance in the future. "There is a remarkable consensus - among distributors of all sizes and across all lines of trade and consumer types - that information technology is not being employed as aggressively as they would like in their organizations. Although a handful of distributors operate at the cutting edge of IT and use IT as a strategic differentiator, the majority approach IT more conservatively."
CLOUD COMPUTING CHANGES THE GAMEOne growing trend that is changing the way companies employ IT solutions is cloud computing. Cloud computing is bringing a new connectivity along with flexible, instant access to information across different platforms. Current cloud models allow distributors to completely depend on the cloud if they choose, or they can create hybrid solutions that integrate the cloud and on-site systems.
In simple terms, the cloud is a type of information warehouse that collects and distributes information from all customers, salespeople, counterpersons, and any other supply chain participants that are given access. It helps remove the need for large server set-up, maintenance, and IT services, as well as brings greater visibility into what is going on in each facet of the distributor's business.
For distributors of all sizes, cloud services provide the ability to outsource many of their IT needs, giving them access to greater technology that was once less attainable, primarily due to cost and lack of understanding.
WAREHOUSE IMPROVEMENTS REQUIREDMost warehouses are full of bar codes and scanners that tie into some piece of software. How old those systems are usually effects how efficiently they manage distributors' warehouses. Upgrades are necessary to keep the flow of business at a timely and efficient pace. Some technologies to consider when implementing a new system or upgrading an old system are things like vendor managed inventory (VMI), radio frequency identification (RFID), voice-directed picking, pick to light, and more.
RFID, made popular by the Department of Defense (DOD) and discount retailer Walmart, is an asset tracking system, and its advancements are trickling further into the supply chain. Although the technology hasn't reached broad-scale adoption yet, it is pushing into distribution models large and small across multiple industries. RFID applications are increasing, but the technology itself also continues to develop. Each new piece - such as the addition of sensors - creates a more intelligent supply chain system.
Other technologies, like voice-directed picking, are garnering attention too. Voice-directed picking systems take the user away from the computer screen and places them on the warehouse floor. Armed with a headset with microphone and a mobile computer device, the employee receives directions as to where to go in the warehouse to find an item, which item to pick up, and how many to get. Once the user has completed the task, they verbally confirm the pick with the computer or instruct it as to what actually occurred. The system is automatically updated from the verbal interaction reducing the time spent in finding and entering equipment.
No matter the technology chosen, the key to improving the warehouse is finding technology that will move it from a managed storage facility to a communicating machine that processes product and aids distributors with product visibility and overall efficiency.
LEGACY SYSTEM ADVANTAGESIt could be argued that distributors who are lost in a technology vacuum or still working to make their legacy system function have a slight advantage when it comes to choosing what technology in which to invest. It is known that there is often a price to pay for being a first-round technology adopter. When a piece of technology initially hits the market, it can be rather expensive as well as have a few kinks in the system. After some time has passed, another generation of the same technology is often released. Usually most of the kinks have been worked out, and as demand and adoption rates increase, the price tag can drop.
With this in mind, distributors looking to begin their IT journey or further engage technology for their businesses may find that what was unattainable five years ago is now in reach due to large-scale adoption and better price availability.
This doesn't mean that distributors can always afford to wait around for everyone else to try out technology first. There are definite advantages to being a first-round adopter. For those distributors who haven't gotten serious about the IT being used in their business, however, there is still time to recover.