Need for Analytics

Unless distributors have a deep understanding of the specific drivers of cost...they will be unable to make smart..decisions

Distributors' increasing demands of customers and suppliers is also driving the need for more in-depth analytics.  Unless distributors have a deep understanding of the specific drivers of cost within their organization--and how different customer and supplier behaviors are affecting both those costs and profitability--they will be unable to make smart segmentation and portfolio decisions ( such as identifying specific customers and suppliers to target for profit improvement actions).

Customers place upstream pressure on distributors to:

• Hold less/no inventory themselves while at the same time minimizing out-of-stocks of key items
• Manage the inventory they do hold, with no guarantee that they will pay for this service
• Provide just-in-time, overnight delivery on orders
• Continuously improve overall service levels

Conversely, vendors expect their downstream distributors to:

• Stock as much of their inventory as possible (number of SKUs, number of items of each SKU, and so on)
• Exert greater influence on market dynamics--identifying new opportunities and stimulating demand
• Work collaboratively to generate sales, product, and forecasts--sharing data and insights
• Identify unmet needs in the market and prioritize new opportunities.

ACTION POINT:  Think about the expectations of customers and vendors and how they affect your cost of operation.