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Getting Your Delivery Act Together, Part I

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Getting Your Delivery Act Together, Part I

Supply chains are evolving to meet the demands of today’s B2B customers. Is your distributorship ready, or is it falling behind?

 

Supply chain management has become a hot topic for product-oriented companies that have suddenly found themselves competing against e-tailers like Amazon in the race to get to the customer as quickly as possible. In the B2B space, distributors are having to sharpen their pencils and figure out how to win that race or risk being left behind.

Put simply, it’s no longer enough to just take an order, fulfill it, load it onto a delivery truck, and get to the job site within an agreed-upon period of time. Today’s customers want and expect to have 24/7 visibility over those orders—often from the point of manufacture right until the goods are dropped off on their doorsteps. As B2B continues to look more and more like B2C—where customers are now getting their Amazon Prime shipments next day (in many cases)—those once-lofty expectations are becoming the norm.

Amazon is leading the charge on fast deliveries and end-to-end supply chain visibility, with other retailers responding quickly with their own initiatives. In April, for example, Amazon announced that it was funneling $800 million into making one-day shipping standard and free for Prime members. “Our goal is to evolve the two-day free shipping program into the one-day free shipping program, and we’re making strides on that,” CFO Brian Olsavsky said in an April conference call, CNN Business reported. “We feel like we are doing something very important for the customer.”

The e-tailer is also investing heavily in its transportation and logistics infrastructures. According to CNBC, Amazon has announced more than half a dozen major investments representing billions of dollars, with the bulk of those efforts being focused on new delivery businesses and logistics. Those initiatives include an investment in self-driving car start-up Aurora; leading a $700 million investment round in electric truck start-up Rivian; and the expansion of Amazon Air (to include 50 planes and new regional hubs).

The company is also working to close the last-mile delivery gaps that are plaguing many product-centric companies. And while electrical distributors typically used their own trucks to manage this part of the delivery process—particularly those that operate locally—it’s yet another sign of the e-tailer’s prowess on the fast-delivery front. Under a new incentive program, for example, Amazon is funding up to $10,000 in startup costs and providing three months of pay to any employee who chooses to “abandon their staff gig and start an independent last-mile delivery business,” ThomasNet reports. “The offer is low-risk and high reward, with benefits for everyone involved.”

Ramping up the Supply Chain

Incorporating all of the business processes, systems, and services needed to move raw materials and finished product from the manufacturer and out to distributors and end users, the B2B supply chain is getting faster, more expensive, and more challenging to run. A chain, after all, is literally only as strong as its weakest link. For this reason, we’re seeing more distributors taking a good, hard look at how they—like Amazon and other large e-tailers and retailers—can deliver products quickly while also providing high levels of visibility over those orders.

“Amazon has changed the game,” says Julian Wiles, VP of operations at M. Holland Company, a distributor of thermoplastic resins and ancillary products in Northbrook, Ill. “They’ve caught a lot of companies flat-footed in terms of how to effectively interact from a B2B standpoint.” For example, Wiles says distributors that cut their teeth on traditional brick-and-mortar business models grew up thinking that the customer was “operating on our time,” versus the time that was optimal for that customer.

Amazon flipped that model on its head by asking (at least theoretically) questions like, “Hey customer, what time works best for you?” Going a step further, the e-tailer would also provide updates on exactly where the shipment is in the supply chain—an added bonus that wouldn’t be feasible without the use of technology. “Amazon just really revolutionized the way that companies operate in the supply chain space,” says Wiles.

In response, B2B distributors have had to step up their own warehousing and transportation efforts, and all with the goal of providing high levels of shipment visibility and faster deliveries. On the surface, it sounds as simple as buying a few more trucks and installing a technology platform that allows customers to track their orders. In reality, however, it could also mean tapping into suppliers’ networks and tracking products upstream, where they’re actually made and then shipped to the point of distribution (and, subsequently, delivered to the customer).

“The problem is that a lot of old processes that are in place today lack real-time visibility,” says Jeff Newman, VP of supply chain visibility solution sales at CalAmp in Dallas. “That directly impacts a small- to midsized distributor’s ability to optimize the speed of delivery and offer customers a true picture of what’s going on with their orders.”

Feeling the Pressure

From inventory management to e-commerce to freight services—and everything in between—streamlining the process in a way that makes economic sense isn’t getting any easier. Add the speed and velocity of customer orders to the mix and the situation becomes even more difficult for a distributor to wrap its arms around.

“Throughout the supply chain, distributors, manufacturers, and wholesalers alike are feeling the pressure of increased competition,” Sana Commerce points out. “E-commerce is forcing B2B organizations to level up and take a more sophisticated approach to sales: one that incorporates both offline and online channels – and does it well.”

For distributors in particular, it adds, the threat of competition is coming from all sides. “Our recent research tells us that about 40% of distributors feel competitive pressure against manufacturers and wholesalers rising as a result of digitization,” the e-commerce platform provider notes. “Meanwhile, nearly 50% feel more pressure to compete against other distributors.”

The good news is that with today’s technology tools, buy-in from the top, and a commitment to change, electrical distributors can turn the tide and begin satisfying their customers’ thirst for better visibility, order tracking, and delivery speeds. In Part II of this article series, we’ll show you how to start leveraging these tools today.

Read more about optimizing delivery for your contractor customers in the June issue of tED magazine. Turn to page 24, or click here to read the Contractor Q&A.

 

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Bridget McCrea  is a Florida-based writer who covers business, industrial, and educational topics for a variety of magazines and journals. You can reach her at bridgetmc@earthlink.net or visit her website at www.expertghostwriter.net.

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