Wholesale distribution always seemed insulated from the rapid, unpredictable changes introduced by digitalization. However, this technological immunity is quickly turning into an inflection point that is relentlessly separating winners from losers, as nontraditional players from adjacent industries tighten competition.
Midsize distributors make up a significant percentage of the entire industry and are seizing this moment of reckoning. According to the IDC InfoBrief “Becoming a Best-Run Midsize Wholesale Distributor: Intelligent Capabilities Drive Differentiation,” such midsize distributors are shifting from a focus on selling volume to differentiating themselves through value-added products, services, channels, and externally focused solutions.
But first, the industry needs to overcome a considerable glitch in its plans: finding people with the right skills. IDC reports that 54% of best-run midsize distributors believe limited access to talent can get in the way of setting themselves apart from new and varied competitors.
Challenging industry traditions to attract and retain the right people
Failure to attract and retain qualified people to replace an aging workforce may be the Achilles’ heel of growing distributors. Unfortunately, time-honored traditions of working in remote locations and moving through the ranks from entry-level positions with on-the-job training are not enticing to a younger generation of workers.
On a positive note, distributors hold tremendous promise for their workforce. From stable, well-paying jobs to career growth, distributors are highly competitive – especially when they rethink their employee experience with the latest digital technologies.
The IDC survey indicated that “best-run midsize distributors are more likely to focus time and resources on retaining existing talent and attracting new bench strength for the future.” For example, 73% of best-run wholesale distributors actively use talent management software, versus 57% for the overall industry. In return, these businesses are accessing the real-time insights needed to anticipate employee behaviors and provide complementary capabilities – such as process automation, cloud-based collaboration, and mobile connectivity – to enhance workforce performance.
Take, for example, Productos Metalúrgicos (PROMESA). As a small company competing against major suppliers, the growing distributor wanted to automate its aging manual processes to better meet customer expectations with the right product at the right time. Knowing that employee engagement is key to delivering such an extraordinary customer experience, the company decided to deploy a next-generation ERP suite as its digital core. Then it integrated the suite with pre-configured talent management solutions, as well as sales and service applications, in a cloud environment.
This digital strategy allowed PROMESA to centralize talent management and open a self-service portal to increase employee productivity. The workforce now has an in-depth understanding of their customers’ industries. Processes are integrated across operations, sales, and finance to support intelligent decision-making and action. Plus, real-time analytics open access into inventory and customer needs.
But more importantly, all employees have the tools and skills they need to become trusted advisers to PROMESA customers.
Investing in talent and capabilities to move opportunistically
Between the findings from IDC and the real-life experience of PROMESA, it is becoming clear that midsize distributors are well-positioned to embrace digital disruption to amplify talent management capabilities. This moment presents a transformation opportunity for attracting and empowering a new generation of workers to move the business forward in new, strategic ways.
Discover how best-run midsize wholesale distributors are driving revenue, empowering employees, and responding to customer needs with groundbreaking, more-efficient strategies. Check out the SAP-sponsored IDC InfoBrief, “Becoming a Best-Run Midsize Wholesale Distributor: Intelligent Capabilities Drive Differentiation.”