Artificial Intelligence
Artificial Intelligence (AI) is the wolf at the distributor’s door. It enables alternative channels to directly compete with your offerings.
As an example, I recently needed to replace a pair of faucets as part of a home renovation project. I went to the website of the local supplier recommended by my contractor. When I typed in the stock number on that site, I received a drop down from a national supplier. That company offered a 20% price reduction on the item plus 10-day free delivery and a 10% discount for a first time customer. By merely entering a stock number on a company’s website, its competitive suppliers had access to the request! This kind of access is enabled by AI and the adoption of this technology is moving rapidly.
Be strategic
Distributors need to have a strategic plan to offset the AI challenge. Look for new ways to innovate rather than just relying on the tried and true. For example, in the past, distributors have focused on best practices to remain competitive. While this remains important, in a recent article, Mark Dancer, CEO of Network for Business Innovation, cautions that best practices are not implementable, proven solutions but merely ways of catching up with what others are doing. Similarly, continuous improvement is about getting really, really good at what you already do. Combined, best practices and continual improvement do more to lock existing business models in place than to help companies leap forward with game-changing innovations.
Start with the fundamentals
I am working with a small distributor that is taking its first steps toward digitization. The company is giving all employees mobile computers. Depending on their roles, some may receive barcode scanners, radio frequency identification (RFID readers) and mobile printers. Amanda Honig, Regional Portfolio Manager for Zebra in North America, explains in a recent issue of Industrial Distribution, “This [mobile devices] is the fundamental ‘digital’ toolset in today’s distribution and warehousing environment. They can quickly locate, pick, and pack parts and equipment, report findings of visual quality inspections, and notify stakeholders when things are on the move to the next destination – whether that’s a shelf bin’ packaging line, loading dock, or customer.”
Deploy simple digitization
To deal with the AI wolf at the door, SMBs need to start by deploying simple digitalization of their data and workflow. Focus on core processes such as inventory management, receiving, picking, packaging, and shipping. Train your workers with dependable, mobile computers that improve daily activities. These steps will help you better compete in a world running on AI.
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