Getting Close to the Customer

They are looking for distributors to provide deep product knowledge and market insights, custom solutions, and differentiated services.


Today’s customers expect their distributors to deliver value with every “touch.” They are looking for distributors to provide deep product knowledge and market insights, custom solutions, and differentiated services. Today, customers are far less tolerant of poorly planned or executed sales calls that do not focus on their objectives.

Unfortunately, too many distributors will readily admit that they are “not easy to do business with”—a perilous situation in today’s hyper-competitive environment. Distributors must focus on three key things:

• Leveraging the data they collect from each of the various customer “touch points”
• Empowering the sales force and customer service functions with customer relationship and sales force automation software applications
• Creating a web-based extension of the organization’s physical presence.

ACTION POINT: Use data, technology tools and organizational web presence to get closer to your customers.

Getting Closer to Customers

...customers expect customer-facing personnel to quickly access, integrate, and share information and insights...
Distributors agree that “getting closer to customers” is a top priority in the next five years. Achieving that goal takes on new meaning in the information technology age. Customer preferences about how, when, where, and why they want to interact with distributors continue to evolve.


In response, distributors must adapt the communication options they make available to customers. While face-to-face interactions will continue to play a central role in distributor-customers relations, information technology can bring opportunities into focus by removing transactional issues from the agenda. This will allow sales and customer service resources to focus on value-added topics, such as understanding customers’ needs, defining new services, prioritizing market opportunities, and aligning forecasts and plans.

In this environment, customers expect customer-facing personnel to quickly access, integrate, and share information and insights—about the relationship, customer product and delivery preferences, pricing, sales volumes, and other important issues.

ACTION POINT: Deliver value over and above products and services via insights and information.

Managing Complexity

"When things look very simply, you to need to look for competitive edge. When things are complex, you simplify to get the competitive advantage."



The growing complexity of products, the supply chain, and even transactions (with discounts, tiered pricing, rebates, promotions, and other incentives) demands that wholesaler-distributors leverage a robust, flexible, scalable, highly functions IT infrastructure. Yet many distributors continue to utilize homegrown or aging packaged applications that lack the functionality required by e-commerce, cost-plus pricing, sales kitting, back-order rejection, and catch weight in purchasing--to name just a few.



In today's competitive, efficiency-focused environment, distributors must manage complexity by reducing it through simplification--and by employing tools and technology to capitalize on the remaining complexity. The thoughtful application of information technology plays a central role in realizing both objectives. As it was recently put, "When things look very simply, you to need to look for competitive edge. When things are complex, you simplify to get the competitive advantage."

ACTION POINT: Strive for simplicity.

Customizing the Checklist - Role

partner with and monitor company executives, guide company strategy, and create a bright line between delegated decisions and retained authority.

Distinct positions necessitate their own unique additions to the core Leader's Checklist.  The customized principles for top executives are different from those for front line managers.  They, in turn, are different for company directors.

In interviewing more than a hundred company executives and institutional investors--part of a study of how the two work together or are sometimes at odds with each other--I found a special demand for chief executives to build personal familiarity with their largest investors, articulate a compelling vision for where the company was going and a persuasive strategy for getting there, and generate steady quarterly and annual growth in company earnings.  In a separate study of company directors, a professional colleague  and I learned that many directors place a premium on partnering with--not just monitoring--management, establishing clear lines between decisions retained by the board and those delegated to management, and taking a active role in setting company strategy.

In sum, a customized Leader's Checklist for executives would include building relations with investors, making a persuasive case for how the company will create additional shareholder value, and then delivering steady and predictable growth in quarterly and annual earnings.  The customized Leader's Checklist for company directors, by contrast, might include an ability to both partner with and monitor company executives, guide company strategy, and create a bright line between delegated decisions and retained authority.

ACTION POINT: Build key relationships and a persuasive case for creating value internally and externally.

Assessing the Business Case for IT

Ensuring ongoing, close alignment between business and IT strategies is an increasingly critical mandate 

To evaluate the myriad technology options available, distribution managers must embrace a structured analytical approach and have a deep understanding of both the company's business strategy and its current and future business requirements.

Ensuring ongoing, close alignment between business and IT strategies is an increasingly critical mandate for distributors' businesses, and one that requires the attention and commitment of senior leadership.

ACTION POINT: Align your IT and business strategy.

IT opportunities, Trade-offs and Costs III

These actions are appropriately viewed as strategic and differentiating. 

A large number of distributors are either in the midst of, or actively considering, significant investments in their IT infrastructure--focusing on capturing next-generation benefits such as process and asset optimization (not just automation), and accelerating top-line growth.

This is evidenced by distributors strong interest in ERP implementations and upgrades; planned upgrades to warehouse management systems (WMS), customer relationship management (CRM) systems and numerous announced upgrades to e-commerce websites.  These actions are appropriately viewed as strategic and differentiating. 

ACTION POINT:  Advance the role of IT beyond cost reductions and operating efficiencies.

IT Opportunities, Trade-offs and Costs II

Now is exactly the time for distributors to consider bold decisions and prudent investments. 

Distributors remain under intense financial and competitive pressure, and these pressures are encouraging them to focus on realizing additional operating efficiencies, better aligning expectations with customer and vendor forecasts and plans, and increasing product and service profitability.

Now is exactly the time for distributors to consider bold decisions and prudent investments.  The economic recovery may be characterized by persistent volatility; uncertainty, and unpredictability, but it is these dynamics, coupled with increasing business complexity, that drive the need for a robust, agile IT infrastructure.

ACTION POINT: Given the high levels of complexity in their operations, distributors must look to reduce it where necessary, and capitalize on it when possible.

IT Opportunities, Trade-offs and Costs

a narrow perception that fails to realize the full value of IT

Initially, companies leveraged IT for its efficiency-related benefits--automating and standardizing process and work flows to reduce costs.  Many took advantage of IT's additional benefits to trim headcount and inventory, reduce errors and rework, accelerate process cycle times, and improve supply chain visibility.

Nonetheless, some distributors continue to view IT only in terms of boosting efficiencies and trimming--a narrow perception that fails to realize the full value of IT, including it's ability to act as a catalyst to transform the business.

ACTION POINT:  Expand your view of IT's possibilities to impact your business.

The Transformative Role of Information Technology IV

...now is not the time for undue caution or risk aversion.

As with other investments, IT expenditures require careful consideration and planning.  However, now is not the time for undue caution or risk aversion.  As long-term, profitable growth again becomes a realistic expectation, distributors must priortize strategic investments in IT.

Those that create an agile, insight-driven, differentiated organization will be best positioned to thrive in our increasingly complex, volatile, and unpredictable economic environment.

ACTION POINT: Focus on and invest in the areas that create agility, insight and differentiation.

The Transformative Role of Information Technology III

...understand, prioritize, and harness these trends...

At the same time, new information technologies and business trends are creating truly transformative business opportunities for innovative distributors.  Offerings such as cloud computing, software as a service (SaaS), infrastructure hosting and outsourcing, and virtualization provide distributors with low-cost, flexible access to the latest technologies.

Also, social networking,k location-based services, and new ways of collaborating and sharing information online are changing the ways individuals and organizations interact.

ACTION POINT: Leading distributors will understand, prioritize, and harness these trends, where it makes sense, to transform their business and create lasting competitive advantage.

The Transformative Role of Information Technology II

...IT will further cement its position as a business differentiator.



Individual information technologies have become a pervasive and integral component of wholesaler-distributor operations--automating low-value, repetitive activities; increasing visibility into and across the supply chain; and creating a common, updated view of the business.

In doing so, IT applications have freed resources for other, more productive and valuable activities; reduced errors and rework; and enabled better decision making.  As distributors further develop their e-commerce capabilities, expand their web-enabled services, and leverage advanced analytics to gain insights from the vast amounts of data within their organizations, IT will further cement its position as a business differentiator.

ACTION POINT: Automate the least productive tasks and develop robust web-enabled services.

The Transformative Role of Information Technology

...create a bold IT strategy to guide investments in IT infrastructure and capabilities.



As distributors look to position themselves for future growth opportunities--including online--they must further elevate the profile of the information technology function and create a bold IT strategy to guide investments in IT infrastructure and capabilities.

Unfortunately, many customers, suppliers, and competitors have more mature, sophisticated IT infrastructures and capabilities than their distributor counterparts.  Indeed, a great many wholesaler-distributors continue to operate with fragmented, legacy systems that are unable to keep pace with the demands placed on them by customers, suppliers, and supply chains.

ACTION POINT: This dynamic must change if distributors hope to carve out a truly value-added, differentiating role in the supply chain.

Customizing the Checklist

Every organization requires its own customized set of checklist principles. 

The 15 principles provide a solid foundation for a Leader's Checklist, suitable for most leadership moments  at most organizations at most times.  But "most" is not always good enough.  Customized checklists are required for distinct times and contexts.  Among the most important divisions are those of company, role, country, moment and personal place.

Company.  Every organization requires its own customized set of checklist principles.  In recent years, many of the largest have established such lists.

The Leaders Checklist for General Electric, according to those highly familiar with the company would include, for instance, teaching others how to lead their divisions, making tough--often wrenching--personnel decisions around performance, and continually innovating.   A checklist for Google, by contrast, would place greater emphasis on pursuing individual creative sparks, keeping teams small, and guiding others in an even-keeled manner.

A checklist for a major professional services firm might identify nearly a dozen special capacities that it holds to be vital for its managers, including seeing the world through clients' eyes, enthusiastically engaging with clients, and working with them to transcend conventional thinking.

ACTION POINT: Identify the key principles for your company checklist.

Enabling Employees

Are we prepared to guide employees through the development process?

Managing and enabling employees is a broad-based proposition encompassing all the various tasks pertaining to human capital management.  Evaluate your capabilities in these areas consider the following:

• Are we proactive in building more awareness of our industry and our business--in our communities and among potential employees?
• Have we explored all the options for developing and training employees--including working with outside vendors and institutions?
• Are we prepared to guide employees through the development process?  Does training map to individual capabilities and ambitions?
• Do we have an inventory of our current skills base?  Are we able to identify and fill gaps going forward?
• Do our salespeople have the information and training they need to negotiate at a higher level (value vs. price/discount/volume only)?
• Are our assessment strategies well designed and developed?
• Are we committed to retaining valued employees, even if that means developing new working arrangements and compensation options?

ACTION POINT: People our are greatest resources.  Invest in recruiting, developing and retaining them.

Thinking about Human Capital Strategy

How can we accelerate the development of "the best and the brightest" from within the business?

When developing or rethinking a human capital strategy, consider some of the following questions:

• Do we have a structured, analytical approach for differentiating between high and low performers?
• Are our decisions related to recruiting, hiring, compensating, retaining, and dismissing employees based on accurate, up-to-date information and aligned with the requirements of our business strategy?
• Are we effective in transferring valuable knowledge, skills, and insights across the organization?
• Are we leveraging available technologies to enhance collaborations and communication, improve decision making, and enable performance?
• How can we accelerate the development of "the best and the brightest" from within the business?

ACTION POINT: Develop a comprehensive strategy for developing your human capital.

Tools and Analytics to Heighten Productivity III

a growing number of tools, solutions, and applications are available to assist distributors 

Across the spectrum of functions and processes, a growing number of tools, solutions, and applications are available to assist distributors in monitoring, managing, and enabling worker performance and productivity.  

For distributors, these technologies will become an essential component of their business success.  Some examples in specific functional areas include:

The warehouse

• Guiding workers to the most efficient route to product locations for order-picking.
• Estimate the time require to pick each order.
• Monitoring worker productivity (number of orders, items, time to pick, errors)
• Calculating the required workforce based on workload

Customer service, inside sales

• Monitoring worker productivity (number of calls, time per call)
• Measuring conversion rates
• Assessing customer satisfaction and problem resolution effectiveness

The sales force

• Confirming the number of sales calls
• Understanding the volume of incremental sales
• Managing accounts
• Managing territories (scheduler to plan territories for recurring calls to help ensure coverage, for example)
• Automating the collection and communication of customer data and orders
• Work flow scheduling with other departments

Drivers

• Calculating the most efficient route
• Ensuring safe practices

ACTION POINT:  As distributors look to ensure a return on their human capital investments, continued assessment of worker productivity and effectiveness will become mainstream.

Tools and Analytics to Heighten Productivity II

tools to drive consistency, facilitate a two-way information exchange, optimize workforces, and measure performance.

On the customer facing front, many distributors have invested in CRM and sales force automation (SFA) tools to drive consistency, facilitate a two-way information exchange, optimize work flows, and measure performance.

Realizing value from these and other productivity-enhancing tools requires an appreciation for the underlying personnel and their ability to change.  As one CEO contemplating a major CRM investment put it: "Right now, each salesperson does their own thing. With the system, they plan on achieving greater consistency, but also recognize there will be 'big change managment' considerations."   

ACTION POINT:  Recognize the behavior changes that will be needed to capitalize on new tools.

Principles 10, 11, 12

vital qualities are exceptional self-awareness, self-regulation, and personal empathy, a combination that he has termed emotional intelligence.

Manage relations, Identify personal implications and convey your character.  Frances Hesselbein, who led the Girl Scouts for more than a decade and then led an organization for nonprofit leadership, emphasized the value of personal mentoring, flattening the hierarchy, and hearing dissent.

For researcher Daniel Goleman, vital qualities are exceptional self-awareness, self-regulation, and personal empathy, a combination that he has termed emotional intelligence.  An academic team that studied middle managers in financial services, food processing, and telecommunications in 62 countries, ranging from Albania to Zimbabwe concluded that leaders should avoid developing autocratic, egocentric, and irritable styles.

ACTION POINT:  Seek to develop your emotional intelligence.

Tools and Analytics to Heighten Productivity

Arguably, the sales force is one of the most critical elements of a distributor's business.

In today's environment, achieving greater productivity is crucial; for distributors, this goal begins in sales.  Arguably, the sales force is one of the most critical elements of a distributor's business.  For many customers, their sales force representative is the distributor--their first point of contact, the person who knows them best, and the individual charged with understanding their needs and ensuring those needs are met.

Given the important role these individuals play, it is essential that distributors equip them with the tools, technology, insights, and information they need to effectively do their jobs.  Also, considering the intense competition distributors face in serving their customers, it is equally important that key resource within the organization be freed from low-value activities so they can focus on more productive work.

ACTION POINT: Identify the tools, technology and insights your sales team needs to be effective.

Retaining Talent II

many long-term personnel can be persuaded to stay involved with the business via flexible working arrangements. 

At the same time that  a new generation is entering the workforce, the aging of the existing workforce creates its own unique set of retention challenges.  Fortunately, retaining these valued employees is no longer an "all or nothing" proposition.

Given lingering uncertainties in the economy, declines in the value of retirement funds, drops in home prices, and an interest in staying more active and engaged, many long-term personnel can be persuaded to stay involved with the business via flexible working arrangements.  Such arrangements can include working on select days of the week or during set hours of the day, or may be structured more along the lines of consulting arrangement, with individual skills employed on an as needed basis.

ACTION POINT: These scenarios are truly win-wins for distributors and their employees.

Retaining Talent

today's younger employees have integrated technology into their lifestyle, decisions, and communications--in ways not even imagined five years ago.

Given the sizable investment required to recruit, hire, and develop employees, distributors would be wise to focus additional efforts on identifying and retaining top performers.  Building relationships with today's younger generation is a complex undertaking, and must reflect a deep understanding of these individuals' specific wants, needs, and concerns.

Looking at the new generation, many of today's younger employees have integrated technology into their lifestyle, decisions, and communications--in ways not even imagined five years ago.  For example many of today's teenagers and 20-year-olds view phone calls--even cell phone calls--as outdated, and rely instead on text messages sent via their mobile device.  In addition, they expect information to be rich, searchable, and at their fingertips.  The relevance here is that the next generation of employees will expect heightened access to information and technology, and bring new communication styles to the organization. 

ACTION POINT: Engaging and retaining these individuals will require cultural shifts for many distributors.

Assessing Performance

identify high performers, and craft training programs that address key skills gaps

Though larger distributors place more importance on each of the industry's three key assessment areas (sales force productivity, warehouse/transportation productivity, and customer service productivity) than smaller companies do, there is little differentiation from a performance perspective.

Research shows that some wholesaler-distributors are trying to stay ahead of the curve on many of these issues.  As they look to assess their workforce, identify high performers, and craft training programs that address key skills gaps, forward-thinking distributors are working with outside experts such as Caliper (www.caliper'online.com) on hiring, training, and organizational development issues to define the characteristics of top performers.  Others are looking to sales performance consultants such as Miller Heiman (www.millerheiman.com) to define a new sales process and integrate that with its customer relationship management solution--with the goal of better leveraging available planning and execution tools.

ACTION POINT: Consider the expertise of outside experts to enhance your process and performance in the three key assessment areas, sales force productivity, logistics productivity and customer service productivity.