Distributors

Building A Connected Business, Part 1: The Challenges We Face

Building A Connected Business, Part 1: The Challenges We Face

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 examines the challenges facing electrical distributors.

The Challenges Facing Electrical Distributors

What’s driving the need for digital transformation in the electrical distribution industry?

The need to add value beyond the product sale. Distributors compete with consumer-facing retailers, online marketplaces, and even manufacturers for customer attention. As a result, distributors are increasing their value-added services offering, providing aftermarket support and vendor managed inventory.

The emergence of new markets. Evolving industries are creating new avenues for growth; examples include electric vehicles and renewable energy. The demand for enhanced control and monitoring systems for the smart grid also poses new opportunities.

The increase in selling direct to the end-user by manufacturers. For example, in the LED lighting marketplace, some manufacturers are selling direct to end customers and providing design services, financing, and installation. Digital transformation is enabling this business model.

The bleed-over of B2C customer experience into B2B. How B2B buyers shop and buy has changed. Expectations include pricing transparency, comparisons, inventory visibility, easy access to complementary products, and customizable fulfillment options.

New technology ecosystems embedded in the products distributors sell. For example, LED products, the Internet of Things (IoT), and the smart grid bring new challenges and greater opportunities for distributors.

The rise of online marketplaces. Amazon Business and other online marketplaces are targeting new construction and retrofit markets. Additionally, these online aggregators can integrate with purchasing systems across suppliers, driving customer retention. More than half of the suppliers listed with Amazon Business are distributors. As a result, electrical distributors must rapidly scale up digital services and maintain competitiveness to avoid being cut from the supply chain.

You can see the entire report at www.naed.org/building-a-connected-business

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