Building a connected business is less about just plugging in a new technology and more about how you can use that technology to automate your business, optimize processes and power growth. As a result, NAED is committed to “Building A Connected Business For The Future”.
In 2019, the NAED Education & Research Foundation published an in-depth report, “Building a Connected Business,” which explores the industry’s transition to digital. The outcomes of the research, conducted by Frost & Sullivan, gave NAED members a roadmap for digital transformation informed by customer and manufacturer input. Since the publication of that report, a lot has changed. The pandemic accelerated digital trends that were already under way. Customer shopping and buying expectations have shifted. AI and other emerging technologies have made their way into the mainstream – widening the gap between distributors that have invested, and those that haven’t.
NAED has condensed that report into a an 18-page guide that is now available from the association’s Education and Research Foundation.
Over the next few weeks, tedmag.com will provide you with 5 parts of the report to help you map out this critical journey of where you are today – and where you want to go. Part 1 looked at the challenges electrical distributors now face. Part 2 described a more connected customer. In part 3 of this series, we examine what customers want from their distributor partners.
What Customers Want from Their Distributors
Frost & Sullivan surveyed 130 respondents and conducted four customer interviews to gain insight into the customer challenges and opportunities for distributor improvement. Topics included job site challenges, supplier investments, value chain opportunities, and BIM adoption.
Job Site Challenges
Frost & Sullivan asked customers about the most significant job site challenges they faced. The top five challenges include:
- Just-in-time inventory to fulfill contracts for project needs
- Order discrepancies leading to project delays
- Reconciliation of billing discrepancies from multiple change orders
- Keeping up with industry accreditations and professional certifications
- Lack of shipment traceability/tracking
Customer goals and challenges centered around maximizing the effectiveness of scheduled labor with on-hand materials and managing limited space on the job site.
When asked if they would be willing to spend a percentage of project revenue to “substantially reduce a pain point,” more than 80% of respondents said “Yes”; they would pay 1%-10% of their project revenue to reduce a top-three pain point.
Where Customers Want Distributors to Invest
Customers said if given the choice, they’d ask distributors to make the following their five priorities:
- Building design support
- Product training and product knowledge
- Job site inventory management
- Product configuration and business case/ROI support
- Order fulfillment and improved logistics capabilities
Most customers said they wanted their distributors to invest in improved design support. They also wanted distributors to focus on product training for their employees. In addition, improved material logistics management, both on-site and delivery, was a priority.
How Distributors Can Move Up the Value Chain
What areas should electrical distributors focus on at the front end of the value chain? Customers said distributors should emphasize the following five areas:
- Energy audits
- Value-added services
- Value engineering
- Post-selling activities
- Inventory check – lead times
Results illuminate customers’ desires for distributors to enhance their project consultation abilities and deliver value earlier in the chain. Customers also expect distributors to continue improving their logistics capabilities and last-mile delivery.
Buyers are also eager for a change in how distributor salespeople interact with them. For example, they prefer consultative sales support over simple order-taking – a preference requiring distributors to invest significantly in training and better sales technology.
BIM Support
As customer projects increase in scale and sophistication, buyers expect supply partners to offer Building Information Modeling (BIM) integration. BIM is often a prerequisite for securing contracts for governmental and institutional customers.
Because many customers already work with BIM software for large or complex jobs, distributors that can offer BIM integration early in the process will stand apart.
- For distributors, integrating with customer BIM drawings allows them to be involved earlier in the customer journey and improves their likelihood of winning deals.
- For customers, BIM integration allows them to purchase materials at the design phase. It also enables contractors to predict unique, project-specific construction issues before they occur, limiting their liability exposure.
You can read more about the Connected Business study and download a report for yourself at www.naed.org/building-a-connected-business.
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