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Is Your Distributorship Drowning in Data? (Part III)

Is Your Distributorship Drowning in Data? (Part III)

Six steps that all distributors can take now to start making better use of the mountains of data that they generate and receive on a daily basis.


As you learned from the first two segments of this article series (Part I and Part II), data has become an overwhelming necessity for companies of all sizes and across all industries. But that doesn’t mean electrical distributors and their suppliers have to just succumb to data overload. In fact, there’s a lot they can be doing to actually turn that data into insights that help them make better business decisions, improve their bottom lines, and keep their customers coming back for more.

Here are six steps that all companies can start using now to improve their data management strategies and start making good use of the information that’s streaming through their organizations.

  • Drive it from the top down. As we mentioned in Part II of this series, any good data initiative must have executive buy-in or it won’t work. Simply passing the buck along to IT or marketing won’t work, says Gregory A. Smith, VP of strategic accounts and partnerships at SPA, INC. | SPASIGMA in Cleveland. It also can’t be something that you talk about one month, and then stop reinforcing the next month. “It has to be part of your company’s culture and change management,” says Smith.
  • Bite off small chunks. Data management can be overwhelming and downright paralyzing. That’s why Smith tells electrical distributors to approach it on a step-by-step basis, and not to try to bite off too much at once. First, decide on your objectives, figure out what you’re trying to achieve (e.g., more sales, better margins, more satisfied customers, or all of the above?), and “don’t try to eat the elephant in one bite,” he says.
  • Start with clean data. “A lot of distributors have bad data in their enterprise resource planning (ERP) systems,” Smith points out. “There’s tremendous value with the data that resides in distributions’ ERP systems,” he says. “They just don’t realize it.”

That’s because most of the data isn’t normalized (the restructuring of a relational database in accordance with a series of “normal” forms to improve data integrity) or categorized properly (i.e., customers aren’t in their correct verticals). Cleaning and normalizing the data can be handled internally, Smith says, but if it’s going to take two years for one staffer to handle, it might pay to outsource the task. “There are a lot of third parties out there that do a fantastic job of cleaning up your data,” says Smith, “and normalizing it within 60 to 90 days.”

  • Grab everything that you can. Don’t leave a single byte behind when you start to gather your company’s data. Smith says this is important because the more limiting the data itself is, the more limiting the outcome is going to be. “Just grab everything that you can grab,” he advises. Once you’ve done that, assign someone to the task of extracting the data. “If you don’t have the expertise in-house to handle this,” says Smith, “find a qualified third party to help.”
  • Start analyzing the data. Determine which metrics are most important, analyze those data points, and then turn that information into actionable intelligence (the kind of stuff you can actually act on). Think about the various tests that you can run in order to get different, unexpected insights from the information. An outside party can help with this task by providing a fresh perspective on the data that your employees have been staring at for months or years. “It can pay to have someone look at the data through the eyes of curiosity and open-mindedness,” Smith says, “both of which can point you to different results.”
  • Leverage your networks. If data analytics isn’t a core competency for your distributorship, don’t be afraid to ask for help. Associations like IMARK Group and Affiliated Distributors both have “networks where people have started moving in the direction of analyzing data and actually using it to make decisions,” says David Oldfather, VP of business development at Jigsaw Systems, Inc., in Philadelphia. “You can certainly take the time to learn data methodologies and approaches, but if it’s not a core competency then there’s a good chance that you’re just going to end up spinning your wheels.”

You Can’t Manage What You Don’t Measure

As Smith explained in the first article in this 3-part series, the electrical distribution model is changing right along with most of the rest of the business world. As the customer demands change, and as competitors like Amazon Business continue to hone their business models, distributors must be able to act fast and respond accordingly. Without a good data management approach, meeting those goals in an efficient, affordable manner is nearly impossible.

“To the extent that electrical distributors can innovate and change, the channel will stay strong,” Smith concludes. “If that doesn’t happen, however, companies stand a good chance of being disrupted. That’s because the way distributors do business today will not be the same just five to 10 years from now.” That should put fear in the heart of a distributor that’s not already looking at how to start utilizing its data to provide insights into both its business and its customers.

“When done correctly, data provides insight into increasing wallet share,” says Smith. “It tells you what you’re currently selling to customers and, even more importantly, what you’re not selling to them.” On top of that, data also provides insights into specific, actionable items that help distributors increase wallet share either through recommended price levels or product offerings based on what customers are currently buying.

“Data analysis is incredibly important because if you’re not measuring it, you’re not managing it,” says Jigsaw Systems’ CEO Mark McGready, borrowing a quote from management guru Peter Drucker who said, “If you can’t measure it, you can’t improve it.”

A distributor that doesn’t have its top 10 key performance indicators (KPIs) in front of it at all times, for example, risks getting blindsided by a competitor that does have those dashboards. “You can’t just look at one report and then expect to manage your business based on what it says,” says McGready. “The whole data component needs to be written into your business plan and incorporated into everything you do.”


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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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