By Mike Marks
Founding Partner
Indian River
Consulting Group
Foodservice equipment and supplies distributors face formidable challenges in today’s market. Increasing customer expectations for speedy fulfillment, more volatile fluctuations in demand and the ongoing labor shortage all have dealers looking for ways to become as agile as possible — to prioritize maneuverability so that they are ready to quickly adapt to changing circumstances. The good news is that the digital world is supplying new technological tools that can not only help them navigate turbulence but also take advantage of changes in the playing field. When done properly, that digital transformation can result in lasting and widespread operational and sales improvements.
Digital transformation is not the end goal in of itself, but it is the process that makes those end goals attainable. Take for example forecasting. The aim is to make decisions on what items to keep in stock and how to set pricing based on expected demand. But forecasting is much easier and more reliable when dealers have access to accurate, up-to-the-minute data and the tools to efficiently analyze the overwhelming amount of information that is now available to businesses. With the right digital technology, companies can glean patterns in the noise, change course and tactics as needed and stay on track toward their goals.
That’s just one of the ways that embracing digital transformation can pay off and deliver powerful competitive advantages. It can also:
- Boost sales efforts
- Take the friction out of the customer experience
- Automate marketing
- Help dealers price strategically to increase profit margins
- Provide better visibility and control of the supply chain
- Raise team members’ productivity
- Increase safety, efficiency, quality and performance through smart warehouse technology
But to succeed, dealers need proper planning and groundwork. That means embracing a phased process and a step-by-step plan. It also needs to be holistic to avoid a piecemeal approach that fails due to a lack of integration.
Solving the Puzzle — One Piece at a Time
At first glance, a phased approach that is also holistic may seem paradoxical. But think of assembling a jigsaw puzzle — it’s not possible to snap together the whole jumble of pieces at the same moment. A well-thought-out approach is required, like assembling the border first and then filling in the middle.
At the same time, dealers beginning their digital transformation journey need a clear vision of what the final picture is going to look like, so they know where everything goes and how it’s going to fit together into a coherent whole. But that doesn’t mean being beholden to that vision. During the process, if a tool or technology that looked like a cloud turns out to be a sheep, companies need the flexibility to pivot and adjust to the latest information without getting waylaid by the unexpected.
Taking the holistic approach doesn’t mean trying to build Rome in a day. But it does mean taking the time to visualize a map of the entire city and planning out how all the various parts of it will work together before starting to build.
- A plan for digital transformation should include these five distinct stages:
- Assessment to carefully evaluate the organization’s needs and established goals
- Communication with all stakeholders to make sure they’re on board and aware of the benefits that digital transformation will bring them
- Planning to build the roadmap and process with full awareness of the big picture
- Implementation with plenty of time allotted for troubleshooting, course corrections and fine-tuning
- Ongoing evaluation of metrics and progress toward goals to make sure the business is on track and making corrections if needed
The Digital Toolkit: 4 Technologies That Can Even the Odds
Here are some of the most valuable components many distributors have included in their roadmaps to address the industry-specific challenges from earlier.
A modern customer relationship management (CRM) system: By making up-to-the-minute customer data accessible, along with the capability to analyze it and take advantage of its insights, the right CRM can help dealers build stronger customer relationships while making better decisions and doing their jobs more efficiently. Just remember, CRM is a tool for the sales team to improve how and where they spend their time. Eighty percent of the information in the CRM flows to the sales team and only 20 percent should come from them.
An easy-to-use quote-to-cash electronic processing system: Quote-to-cash refers to the part of the sales process between the preparation of a quote and the payment process. Tools that automate this process expedite repetitive low-level tasks and provide more complete information.
Smart pricing software: A sophisticated pricing strategy can boost profits by increasing margins on the inventory dealers are already selling. Better data and analytics can help identify which items present the best opportunities for price increases and how to determine the ideal price point. The key to this tool is to stop letting the last price paid (LPP) be the default automatic new price.
An intelligent warehouse management system (WMS): Implementing smart warehouse technology can yield all sorts of advantages — from predictive maintenance to keep equipment running smoothly, to data-driven insights that can boost quality, performance and efficiency.
The Path of Least Resistance: Smoothing the Transition to Transformation
Finally, here are three ways dealers can help ensure their digital transformation runs smoothly.
Put customers first: The most important drivers of digital transformation are customers. Dealers may begin their journey by assessing their customers’ needs and readiness, so they can identify the right solutions to meet them where they are. Consider starting by discussing the transition with the handful of digital-savvy good customers seeking potential synergies. They exist, dealers just need to look for them.
Evolve to a generation two business model: To keep up with the competition, distributors need to embrace the fundamental shift that’s happening in the customer buying journey. That means moving to a generation two business model by aligning their technology with customer goals to deliver an experience the way buyers want it, quickly and efficiently. In some cases, that could include moving teams away from a field rep-centric way of thinking in favor of a robust inside sales rep infrastructure.
Build a path of least resistance: Adoption by the team is perhaps the single most critical factor in the success of a dealer’s digital transformation. That means dealers need to engage their team from the earliest stages and make them full partners in the changes to come. Listening to their needs gives dealers the chance to explain how new tools will solve their problems and help them achieve more. Participation creates commitment so let them be involved in the design.
Many critical factors influence inventory levels, profit margins and business success. Using every digital tool in their arsenal enables dealers to remain agile in a quickly changing business landscape, enrich the customer experience and leap ahead of competitors.
About the Author
Mike Marks is the founding partner of the Indian River Consulting Group, focused on B2B channel-driven markets. Prior to founding IRCG, Marks worked in distribution management for more than 20 years. Reach Mike at ircg.com.