The Expanding Role of Services

Customers and suppliers are demanding more services

One of the most discussed topics in the industry is the expanding role of services.  Services remain both a significant opportunity and conundrum for many wholesaler-distributors.  Structuring and delivering services that customers are willing to pay for remains a massive challenge, measuring the profitability of service offerings continues to confound a great many distributors, and mastering the organizational changes that an expanded services focus requires eludes all but a very few distributors.

Customers and suppliers are demanding more services; increasingly agile competitors stand ready when distributors are unable to deliver such offerings; and with continued pressure on product margins, services represent one of the primary levers for growing revenues and profits.

ACTION POINT: Identify the services that customers demand, especially the ones they are willing to pay for.

The New Economic Environment

Things will not revert to the way they were.  

The new economic environment is a term intended to capture the breadth and depth of changes to the perceptions and realities that now exist globally across industries, sectors, and companies.  The crisis was not just an event, but a catalyst that precipitated a series of ongoing, fundamental changes.  Things will not revert to the way they were.

This new economic environment is characterized by increased volatility, uncertainty, and unpredictability.  Any one of these represent a significant challenge to the effective and efficient management of a wholesale distribution company, but when all three exist to a very large extent-- and high levels of complexity are also added to the equation--the landscape becomes challenging indeed.

ACTION POINT: Wholesaler-distributors will need to understand and be prepared to capitalize on deep, ongoing shifts in the structure of the U.S. economy, deploy new business models, and explore new sources of capital and funding.

Decisive Actions for an Uncertain Economy

This only serves to highlight the critical role of human capital in the wholesale distribution business. 

In considering the trends, implications, and opportunities for wholesaler-distributors it is worth emphasizing that while bold strategies and prudent investments will be essential, execution remains the ultimate differentiator.

The best customer segmentation and cost-to-serve analyses will deliver nothing to the bottom line if the organization does not--or perhaps--cannot--execute against those recommendations.  This only serves to highlight the critical role of human capital in the wholesale distribution business.  Products, services, technology, and analysis are all mainstays of the organization, but the workforces ability to execute its roles and responsibilities will ultimately decide success for failure.

ACTION POINT: Understand the value of your human capital and the importance of execution in every role.

Decisive Action for an Uncertain Economy

Striking the right balance will require an intense focus on getting much closer to the customers

Facing the forces of change: Decisive action for an uncertain economy contains a central message about confronting the challenges facing wholesaler-distributors today: charting a successful course in this new economic environment will require a combination of bold initiatives and prudent investment.  

Striking the right balance will require an intense focus on getting much closer to the customers--to better understand their product and service needs; leveraging advanced analytics--to identify and prioritize cost reduction and revenue growth opportunities; and building a highly motivated, capable, energized, and enabled workforce to effectively leverage the latest technologies and methods to delight customers.

As they consider decisions in each of these areas and contemplate the "right" information technology (IT) infrastructure to enable those capabilities, wholesaler-distributors must look beyond the next two to three years.

ACTION POINT: Only by considering longer-term implications now--while aggressively managing today's business--will distributors position themselves for success in the new economic environment.

Decisive Action for an Uncertain Economy

Going forward, distributors must strive for a predictive and proactive posture.

Even as the U.S. economy gradually emerges from the throes of the worst economic crisis since the Great Depression, many wholesaler-distributors continue to struggle financially.  Tremendous volatility, uncertainty, and unpredictability characterize the economic environment and will likely remain the core characteristics for some time to come.

Going forward, distributors must strive for a predictive and proactive posture.  The worst of the crisis may (or may not) be over--either way, now is not the time for complacency.

ACTION POINT: Avoid complacency and recognize the volatility, uncertainty and unpredictability of the times.