Distributors’ Big-Change Challenges
Amazon is teaching everyone to want an increasingly better “e-buying-journey”. Because AMZ is corralling next-gen, B2B buyers’ searches, manufacturers are scrambling to create Omnichannel solutions for B2B e-buyers. How will distributors change to accommodate both the new needs of customers and suppliers?
Distributors’ standard service-bundle (including outside and inside sales overhead) will be pressured into un-bundling and then re-bundling in multiple ways. To do this, distributors will need to know their service-activity costs on an a la carte basis and have a data-driven culture of innovation.
What? Why?
With a cost-to-serve model distributors can do a two-step transformation:
- Identify the big net-profit and net-loss cross-subsidies that hide within aggregated financial numbers.
- Then, feed the winners and fix the losers to boost both their profits, and the courage needed to invent new business models.
By knowing the a la carte costs for each service activity, distributors will have 3PL-type flexibility. For key accounts, distributors can co-design customized replenishment systems and then e-integrate them. How customer-centric!
Getting best net-profit analytics is the easy part. (Contact me for a virtual session on this). The tough part is acting on new insights to first get super-profitable, to enable digital business-model innovations.
“MY VETERANS WON’T CHANGE”
If culture is: “the way we do things around here”, (as well as the get-along, go-along standards that we have accepted for too long). Then, most distributors have too many “set in their ways” associates who will resist any real change. What to do?
New Department Takes Non-Invasive, Small, But High-Impact Steps
Net-profit analytics (at the line-item level) allows you to zero-in on one, best, focused experiment at a time. To execute: set up a stand-alone “Innovation Department” with a “champion of change” to secure targeted wins. Trumpet wins to induce the next-most ambitious employees to bid for “Innovation-Department” help. Change the culture one person/department/territory/branch at a time. Hardcore resistors will feel increasing peer pressure to embrace growth and change or leave. Why should a few entitled associates be allowed to sit in the company boat and watch everyone else row them to greater prosperity?
For More How-To’s:
Check out these two bite-size blog posts:
For the big burrito, going into much greater detail, request my Core Renewal Roadmap by email: [email protected]
And, follow my curated posts (with commentary) on LinkedIn to track the on-rushing B2B, cloud ecommerce opportunities. Click HERE or search for: D. Bruce Merrifield, Jr.