Technology in Today's Wholesale Industry
Almost the entire distribution chain is linked together by technology in every phase imaginable. The larger distribution networks report entire complex shipments arriving at their dock doors with close to 99 percent accuracy rates. These advances are making the process of counting in inventory no longer cost-effective. The time and effort spent trying to find the one miscounted part or supply is simply no longer worth the labor. Almost everything is scanned and rescanned countless times before it ever leaves the main distribution center, and the accuracies that can be achieved today are astounding.
STRIVING FOR EFFICIENCY
The way successful supply houses operate in today’s brave new world depends completely on a business model that strives for total efficiency. For example, how many steps does it take for warehouse personnel to pull an order? How many keystrokes does it take the staff to enter an order?
The ideal scenario is that customers are entering their own orders online, thus increasing a distributor’s gross profit dollars generated per employee. If distributors aren’t actively trying to move more of their customer base over to Internet purchasing, then they are missing out on the opportunity to increase margins while keeping customers loyal. Studies have proven that once a customer becomes efficient navigating an Internet site, it becomes extremely hard to convince that customer to switch sites or suppliers. Instead, it becomes much easier to communicate with the customer base, once they are regulars, about training classes, special sales offers, new product and so on.
Successful wholesalers understand they don’t need to add more employees. Instead, they need to maximize their current employees’ abilities by applying new technologies, best practices and solid procedures.
The forecasting program that various software platforms offer, for example, allows a supply house that is well managed to rarely be without inventory.
If the distributor’s operation lacks in any of the critical areas mentioned above, chances are they will soon be extinct with players such as Amazon creeping into the fray along with manufacturers selling direct more and more frequently. These elements make a wholesaler’s margin for error almost nonexistent.
EVALUATING TECHNOLOGY USAGE
Wholesalers must strategically look at how product enters and exits their buildings. How well and often does the staff scan product? How interconnected are a company’s various locations, and how well do they share stock? Does the company have the right software that will allow employees to code stock as A-, B-, C- and D-moving stock? Does the company rotate stock to help prevent old inventory from becoming either obsolete or a second generation part? The key to answering these questions is to rely on the right reports. The only way to generate these reports is to invest in the appropriate supply chain management software. This way, distributors can reduce their amount of costly dead stock.
When adopting new technology, more training becomes a must. Unfortunately, this is where many wholesalers fall short. The days of understanding the products that a company sells and its customers are seemingly over. Employees must now be well versed in how to use the various technologies that are at their disposal, be it forecasting models, smartphones, iPads, tablets, scanners, customer relationship management software or HVAC apps. No matter the technology, a detailed ongoing training program is more important in today’s distributor world than ever before.
This training and knowledge are important because the wholesaler’s customers are more tech savvy than ever, as various technologies are now in their hands too. They use iPads and various tablets for everything from sales presentations to invoicing. The question is not if the wholesaler’s sales staff is using technology but whether or not the outside sales force is keeping pace with the technology that their customers are using.
INCREASING TECHNOLOGY ADAPTATION
Wholesalers looking to increase their involvement with different technologies could ask themselves a few questions when analyzing what is best for their company.
1. Does the company have video referrals to show customers?
2. Does sales staff employ the use of PowerPoint presentations?
3. What kind of dedicated email campaign does the company employ?
4. Is there a text message campaign being used?
According to my research, a text message is 10 times more likely to be opened than an email message. All of these methods are a way to reach out to a company’s customer base.
PROVIDING THE WOW FACTOR
If a wholesaler’s company cannot provide what I call the “wow” factor, their ability to retain customers will be tested. In tandem with the “wow” factor, it is important that companies remind customers about their delivery of the “wow” factors. I believe that often when good wholesalers give premium service, customers take them for granted. You just provided the “wow” factor, but it was neither felt nor noticed by the customer. The failure to shock and awe the customer never took place even though you delivered the outstanding service. It is up to the supplier’s well-trained staff to point out the outstanding performance. If a wholesaler’s staff forecasted ahead, predicted the customer’s needs, had the stock on hand ready and waiting for the customer, plus was able to deliver on time, it is up to the supplier to point out the magic in that performance.
I am always asking customers, “Who takes care of you?” I will remind the customer, “Do you realize I just gave you same-day service? You wanted it quoted, then delivered on the same day, and bang, look who came through for you again.”
If wholesalers don’t pat themselves on the back and make customers aware of the excellent services they delivered, they are losing the battle for the recognition they deserve. Worse, they run the risk of having the customer take them for granted.
They will also probably have a hard time charging more for their services if the customer does not perceive the value they’re providing. Emotional response is the basis for purchasing. Not only do wholesalers want to create a positive customer experience, they need for customers to realize they just pulled the proverbial rabbit out of the hat.
Darrell Sterling is a regional sales manager in central New York. He has a proven track record of sales growth and continued experience in the HVAC wholesale distribution industry. Contact Sterling at 585- 721-9571 or firstname.lastname@example.org.