5 Ways Wholesale Distributors Can Maintain a Competitive Edge in Today’s Changing Market
Table of Contents Executive Summary.............................................................................................. 3 Manufacturers and Large Retailers Capture Market Share From Distributors......... 3 5 Ways Sage ERP X3 Helps Distributors Compete............................................... 3
1. Provide a Knowledgeable Staff.......................................................................................... 4
2. Furnish One-Stop Shopping.............................................................................................. 4
3. Become Easier to Do Business With.................................................................................. 5
4. Meet Customers’ Price Expectations................................................................................. 5
5. Improve Business Efficiency............................................................................................... 5
Conclusion........................................................................................................... 6
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5 Ways Wholesale Distributors Can Maintain a Competitive Edge in Today’s Changing Market
Executive Summary In the last few years, the wholesale distribution market has seen a paradigm shift. Manufacturers and large retailers are bypassing distributors and selling direct, and big retailers are operating their own warehouse systems to manage the large quantities they purchase. These strategies are diminishing the need for distributors and resulting in increased competition and a shrinking market share. To succeed in this new market environment, distributors must change the way they operate and serve customers. Modern Enterprise Resource Planning (ERP) solutions furnish a wide range of capabilities that can help distributors streamline their operations and deliver better customer service. This white paper describes five ways that Sage ERP X3, a powerful, flexible, and costeffective enterprise resource planning solution, can help distributors implement new strategies that will enable them to succeed in the face of this new class of competition.
Manufacturers and Large Retailers Capture Market Share from Distributors In years past, manufacturers sold products exclusively through distributors. Today, large retailers reach huge markets and are growing at a rapid rate. This tremendous market share has given large retailers the power to bypass traditional channels and work directly with manufacturers, as well as expand their operations with warehousing facilities. As competition increases from manufacturers selling direct and retailers offering low prices and a large mix of merchandise, distributors struggle to meet customer demands while turning a profit. To survive in today’s changing market, distributors need to increase efficiency, eliminate waste, and become smarter about merchandising their products.
5 Ways Sage ERP X3 Helps Distributors Compete While this environment presents challenges, distributors have an opportunity to compete successfully by carefully rethinking their operations. The key is to significantly differentiate their offerings from competitors and to modernize their business operations. One of the most effective strategies distributors can use to set themselves apart from the competition is to offer exemplary customer service coupled with a unique set of products that will endear them to their customers. At the same time, distributors must also enhance their internal planning to improve inventory and supply chain management, allowing them to successfully compete by reducing prices while improving operating margins.
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5 Ways Wholesale Distributors Can Maintain a Competitive Edge in Today’s Changing Market
A modern enterprise resource planning (ERP) solution, such as Sage ERP X3, is specifically designed to enhance and support efforts to improve both customer service and operational efficiency. Sage ERP X3 enables distributors to implement the following measures for differentiating their operations in the marketplace:
1. Provide a Knowledgeable Staff Distributors have the opportunity to compete successfully by emphasizing their expert technical advice and offering exemplary customer service. Many distributors build a loyal clientele by helping customers analyze their problems and find the right tools, supplies, and equipment. Prompt, accurate, and personalized service can help convert one-time customers to long-term customers. Sage ERP X3 offers numerous capabilities that enable staff to become more effective at helping customers. Sage ERP X3 automates time-consuming manual tasks and provides easy access to current product and customer information so employees can efficiently help customers and answer questions about product availability, price, order status, and more. Visual process maps and workflows minimize errors by automating processes, ensuring that vital but tedious tasks, such as sending email acknowledgements, are performed in a timely fashion without taking up staff’s time. Integrated customer relationship management (CRM) capabilities keep track of all customer interactions so anyone on the distributors’ staff can provide helpful support and better customer service.
2. Furnish One-Stop Shopping Distributors can differentiate themselves in the market by delivering a more comprehensive offering to their customers. By better understanding what customers want and having these products available, distributors can satisfy and retain their customers. To accomplish this objective, distributors need to improve the accuracy of product demand forecasting, understand and evaluate customer buying history, and have a complete view of the customer’s business in order to easily identify and upsell promotional items. Sage ERP X3 helps distributors determine their customers’ requirements with comprehensive business intelligence and analytics. Distributors can scrutinize sales data to make more informed decisions about which items customers are looking for so they can stock the right products. Inventory management capabilities enable distributors to carry the right amount of these products to meet demand without tying up inordinate amounts of cash in inventory. If a customer needs an item that the distributor—despite their best intentions to serve customers— does not carry, the distributor can use Sage ERP X3’s drop shipping capability to request the item directly from the manufacturer. This saves distributors from having to stock slower moving items themselves—while allowing them to fully meet customer requirements.
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5 Ways Wholesale Distributors Can Maintain a Competitive Edge in Today’s Changing Market
3. Become Easier to do Business With Distributors have the opportunity to compete by making life easier for customers—with improved access to information. By providing online self-service access to information about their inventory, distributors can enable customers to check items such as their order status, pricing, and product availability any day, any time. Sage ERP X3 makes collaboration between employees, customers, and suppliers easier than ever before. The extensive “roles” definition capabilities and the web-native interface within Sage ERP X3 permit distributors to configure customer and supplier portals to provide only relevant information. These portals can run in a browser and be available anywhere, even from smart devices. These technologies make it easy for employees, customers, and suppliers to conduct business and help ensure customer loyalty and retention.
4. Meet Customers’ Price Expectations To stay competitive, distributors need to sharpen their pricing skills. Offering product discounts with confidence, executing special promotions, or adopting an “everyday low price” strategy while maintaining profitable margins enables distributors to effectively compete for customer mindshare. Sage ERP X3 enables distributors to better analyze pricing and implement flexible pricing models. Predefined and customized dashboard reports provide distributors with real-time insight into sales information—including everything from sales performance per customer or product to trends in expense accounts to inventory cost analytics. With real-time information at their fingertips, distributors can easily identify the most popular products so they can deliver the products customers want at competitive prices. The flexible pricing module in Sage ERP X3 provides distributors with the ability to discount the highest selling products without having to give blanket discounts. Distributors can pick and choose the pricing and discount levels for different products depending on customer requirements. Combining dashboard reports and flexible pricing capabilities empowers distributors to price key products aggressively to bring customers in the door for products they purchase frequently while retaining higher margins on slower movers that the competition does not stock.
5. Improve Business Efficiency To run an efficient business operation that minimizes operating margins, distributors need to standardize and automate business processes, increase collaboration across departments, and have real-time insight. With Sage ERP X3, distributors can simplify their ordering processes and automatically update customer information from manual spreadsheets within the system. These capabilities allow distributors to provide customized service and eliminate time consuming manual processes, improving operational efficiency. In addition, Sage ERP X3 barcoding capabilities automate the pick/ pack process, eliminating errors from manual picking and speeding up and improving efficiency of order fulfillment processes. 5
5 Ways Wholesale Distributors Can Maintain a Competitive Edge in Today’s Changing Market
Conclusion Distributors can survive and thrive in today’s competitive environment where large discount retailers work directly with manufacturers. The key is to differentiate their offerings by providing better customer service with tactics that include furnishing a more knowledgeable staff, delivering more convenient one-stop shopping for specialized products, and being easier to do business with. At the same time, distributors need to meet customers’ price expectations and improve efficiency. Sage ERP X3 enables distributors to adapt to these new business realities every step of the way with numerous capabilities that help distributors improve customer service and boost operational efficiency.
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