What Is The Most Important Asset In Wholesale Distribution?

Dr. Christine Arend-Fuchs

For many years, there’s been almost no workforce fluctuation in typical large industrial wholesalers and other wholesale distribution companies. On the plus side, the industry benefits from strong customer and partner relationships, but it also means the workforce is aging and at risk of not keeping up with the changes that digitization is bringing.

Even if the wholesale distribution industry tends to be more traditional, its stakeholders are driving digitization and change management. This means wholesale distributors must invest in and accelerate their digital transformation, or risk getting bypassed.

This is increasing the need for an evolution in people management, especially among global wholesale distributors, which must be able to manage a multi-generational, multi-language talent pool and dispersed teams that collaborate digitally.

With the fourth generation of Internet, we expect an increased demand for people with digital skills to help wholesale distributors manage their transformation to new business processes and new business models. Along with hiring young people with digital skills who are familiar with social selling and the virtual world, wholesale distributors also need to think about training their aging workforce.

We all see what is going on in the economic landscape. Even companies with traditional, hierarchical decision making processes understand that today’s winner is not necessarily the largest company, rather the fastest one. Decision making has to be in real-time. This means we need to have the right people at the right time at the right place to make the right decisions. While products and services are more and more becoming becoming commodities, engaged employees, doing their work with their head, hand, and heart, are the key differentiator.

A Gallup study shows that organizations with highly engaged people are up to 21% more profitable, and they have positive impacts on customer loyalty and productivity. This means attracting the right people from the start is essential.

For many years, I have taught bachelor’s, master’s, and doctoral degree students in retail and wholesale business with a focus on international management. Each year, I ask my students to tell me the names of three typical retail companies and three typical wholesale companies. They miss one answer about 99% of the time, and I’m sure you can guess which one. It looks like today’s wholesale distributors need to increase their investment in marketing and branding to win the most promising talents in the millennial talent pool.

In addition to improving your branding to attract younger workers, make sure to focus on developing your organization’s existing talents by offering the right learning programs to position them for success now and to prepare them for the next step of their career. And, last but not least, you need to encourage growth and reward employees to retain them.

A growing number of wholesale distributors are already working with contingent workers due to increasing workforce costs. There are varying numbers, depending on the industry and region, but most are in the range of 30% to 40% of their workforce comprised of contingent workers. And, due to increasing insourcing and outsourcing strategies – think of marketing services, visitor services, facility services, transportation services, security services, and so on – the percentage of contingent workers is growing.

Wholesalers need to manage complex business processes for all types of workers – full-time, part-time, interns, internal, and contingent – as a strategic asset to achieve the right business outcome over the short-, mid-, and long-term.

When you think about engaged employees as a strategic asset, consider the entire wholesale distributor ecosystem. According to an Aberdeen Group study, organizations extending learning to both customers and partners saw nearly double the increase in year-over-year revenue per full-time equivalent. Offering learning programs to customers and partners can increase community engagement and accelerate the digital transformation of the whole ecosystem. This is a recipe for long-term success of not only the wholesaler, but the entire ecosystem.

Get more insight on how management is evolving with the digital economy. See Everything You Know About Leadership Is Wrong.

Dr. Christine Arend-Fuchs

About Dr. Christine Arend-Fuchs

Dr. Christine Arend-Fuchs is Director of Strategies Industry Cloud, Wholesale Distribution, and Program Manager of the SAP Global Advisory Council for Retail and Wholesale Distribution at SAP. Christine holds a doctoral degree in Business Administration from the Universität des Saarlandes and a professorship at University of Applied Sciences at Kaiserslautern leading International Trade, Marketing, and Management.