Over the last ten years, the distribution industry has evolved from a rudimentary buy-store-sell system to an interconnected and collated network that runs seamlessly to ensure maximum profit. As more manufacturers choose to sell directly to retailers, distributors have found themselves in the unique position of cross-industry competition. Furthermore, distributors are facing tougher competition in the market as more businesses adapt their business models to meet industry-specific needs. To remain competitive, distributors have had to adopt new technologies and business models to combat these changes. Major supply chain issues caused by the pandemic has also accelerated the need for distributors to improve operations.
Increasing Competition & Disintermediation
Convenience, price and personalisation has become key to winning business as more consumers are given the choice to purchase the same product from different e-commerce businesses and platforms. Similarly, non-traditional competitors such as manufacturers are now selling directly to customers in both B2B and B2C e-commerce markets, thereby eliminating the need for a distributor.
Fierce market competition also demands diversification. For example, implementing new technology to improve supply chain effectiveness or shifting focus to different revenue streams to adapt to new trends in the market. In doing so, distributors are re-establishing themselves as an essential service as manufacturers struggle to compete with innovative industry-specific tech such as Vendor Managed Inventory (VMI).
The pandemic has led to stricter regulations and a tighter control of goods across multiple industries such healthcare, and food and beverage. . Previously, product recalls have presented a challenge for distributors – identifying specific products and managing their returns is often problematic and costly without the right tech. To ensure least disruption, distributors are demanding traceability and optimisation. By tracking goods within a global network, distributors are able to locate when and where a product was dispatched, saving both time and money.
Global Issues Affecting Supply-chain
Distributors play a huge role in global supply chains and the impact of the pandemic has resulted in large-scale supply chain disruption The global challenges caused by the pandemic meant that distributors had to adapt their supply chain operations to respond better to procurement risk whilst simultaneously balancing an increased demand generated by an influx of e-commerce sales.
High-demand matched with the unpreparedness of such an unprecedented crisis put stress on inventory, supply chains and selling platforms. As the situation continues to evolve, many distributors are looking to technology to resolve these complex issues.
What is the future of the distribution industry?
Distributors can manage industry-issues through a variety of technology-based products and services including Enterprise Resource Planning (ERP) software and purpose-built business applications which provide visibility and control to any business.
If you would like to learn more about how technology can be leveraged in the distribution industry, download out whitepaper ‘How ERP Technology Is Shaping the Future of the Warehousing and Distribution Industry.’