Independent distributors succeed based on the added value they bring to the customer relationship. In 2024, strengthening customer personalization will be critical to your success.
Here are three key areas to focus on.
- Vendor Managed Inventory — According to a report in Modern Distribution Management, business for one of our industry’s largest distributors is good. Fastenal posted a 2023 net profit of $1.16 billion, up 6.3% compared with 2022.
In addition, Fastenal transformed its company from a distributor-dependent-on-its-branch-network to one that prioritizes integrated supply and self-service at the customer location using vendor-managed inventory (VMI). This created significant savings in transportation, reduction in inventory, and ease of operation for both Fastenal and the customer. Introducing this ease of operation and personalized attention allowed Fastenal to gain market share within the customer base.
Additionally, Fastenal’s continuous growth of in-location personalized sales is a wake-up call to the independent distributor. Distributors need to build VMI manufacturer partnerships and start installing units. Fastener’s goal for 2024 is to add 400 additional onsite customer locations. Also, they added 326 in 2023. These gains will come from the traditional distribution network! - Robotics — As a vice president of sales for an independent distributor from 1985 to 2018, I watched robotic equipment costs decrease and product efficiencies increase. This enabled our company to increase sales of this equipment each year. Today, the cost of selling a Cobot is less than $100k. The ease of training customers on this product is negligible, particularly for the computer-savvy operator under age 30. To be successful in 2024, your reps must be selling robotics.
- Warehouse automation – One of the biggest issues a distributor faces is warehousing errors. As a sales executive, I spent countless hours working to resolve warehouse-related problems. Today, logistics software can streamline your warehouse operations and save your company time, money, and customers. Moreover, a typical logistic warehouse automation center uses less space than a traditional warehouse and can receive and retrieve stock quickly while eliminating shipping errors. Automated warehouse logistics includes the management of networking operations, information, transportation, inventory, warehousing materials, and handling and packaging. Lastly, having an automated warehouse enables an outside salesperson to take inventory correction responsibility off their customer support list.
Increased customer personalization
In conclusion, for your sales team to represent the company with increased customer personalization in 2024, distributors must pay attention to the changing dynamics in vendor-managed inventory, robotics, and automation.
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