Technology Roadmap Best Practices
for Wholesale Distributors

By: | Category: Distribution / Manufacturing, ERP

As distributors grapple with profit erosion, workforce shortages, disintermediation and economic uncertainty, many are finding that their day-to-day operations are strained, and their growth opportunities may be compromised. One of Deloitte’s Industry Outlook reported that half of all study respondents claiming that continued supply chain impairments have imposed significant effects on their productivity and profits. These challenges are even more pronounced among distributors using legacy or obsolete technology. 

But those who strategically adopt modern technology, centered around a Digital Operations Platform (DOP), will have the tools to meet today’s challenges while preparing for tomorrow’s issues.
In a complimentary webinar hosted by Industrial Supply magazine, a panel of Net at Work technology experts discussed how strategic planning and technology support can help distributors succeed and grow, and gave examples of opportunities for distributors to deepen their value in their channels. 

What is a DOP and why is it important?

Simply put, a DOP is an agile, comprehensive technology system—with an enterprise resource planning (ERP) system at its center—that can be customized and updated to meet an organization’s needs. Effective DOP solutions can enable distributors to manage their finances, rapidly modify workflows, maintain and improve profitability, and manage diverse workforces. 

The technology solutions are less complex so that workflows can evolve at the speed of business, leverage data inherent in their applications to support more informed decisions, and incorporate and integrate cutting-edge technologies to improve profitability. 

“A DOP can evolve over time,” adds Cleary. “Companies can choose an ERP to sit at the core of their DOP and then pick and choose what the most valuable next steps to digitize are for their own needs. You don’t need to go from 0 to 100 overnight–you can follow a digital plan that a virtual CIO can help you develop.”

Technology roadmaps help show the way to future success

Sluss explained that a technology roadmap is a high-level plan that communicates a company’s overall IT strategy and corresponding timelines. And a technology roadmap is not designed to be finished or complete. Instead, it can be reviewed on a regular, ongoing basis, such as monthly check-ins and quarterly deeper dives.

“The distribution sector today is extremely competitive,” explains Sluss. “In order to remain competitive and have long-term profitability, companies need to not only play on today’s field but also prepare for what’s coming down the line in the future.”

Creating an effective technology roadmap starts with an examination of a company’s day-to-day operations. Says Cleary, “We look to see how legacy systems are impacting a company–are they having data stability concerns? Are they having weekly server resets? Are month-end closes taking 20+ days? Are they still doing everything manually?” And while businesses can build their own technology roadmap, many choose to partner with an experienced partner, particularly one that offers fractional CIO services.

AP automation and dynamic pricing: examples of deepening value in the channel

Once distributors have a core solution in place, automating their accounts payable (AP) tasks is often one of the next steps they take in their technology journey. The return on AP automation is fast—often within a few days—and the return is quick. For example, businesses can not only often avoid hiring additional finance personnel in a tight labor market, but also can free up their current employees to take on impactful work such as investigating high-risk payments.

Distributors often see profits eroded due to manual pricing, so many are shifting to dynamic pricing based on specific time periods, stock levels and other important factors. Dynamic pricing creates additional ordering opportunities by eliminating cumbersome manual processes and bringing in relevant real-time information in a quicker amount of time.

“It’ll be distributors who plug into their DOP correctly that will deepen their value within their ecosystems. While others will continue to struggle with fraud, data errors and mistakes, tech-savvy distributors will be free to develop their competitive advantages as service advisors and customer-centric sources of product information for their manufacturers,” predicts Cleary.

For examples of other ways to deepen your organization’s value and details on how to build your organization’s technology roadmap, access the recorded session here.