As we kick off 2024, adapting to change will be a continuing theme for wholesale distributors in the year ahead. Shifting market conditions, along with procurement issues and labor challenges, demand greater operational agility.
Technology, in the form of a DOP, or digital operations platform, offers solutions to distributors’ most acute pain points. This platform-based approach, introduced by Forrester Research several years ago, provides data visibility across a distributor organization through best-of-breed, next-generation systems integration. Consequently, it can address nagging labor shortages and supply chain issues, create operational efficiencies and drive revenue and profit.
Why a DOP Is Critical to Competitiveness
A high percentage of wholesale distributors maintain technology ecosystems made up of independent software vendor (ISV) solutions that have limited integration. Very few distributors have implemented a single system to handle all the business’s functional requirements. This piecemeal approach leaves gaps in functionality and data visibility that put real-time, accurate decision making and customer service just beyond reach.
As one example, a distributor may use an enterprise resource planning (ERP) system in addition to a separate shipping management system. To schedule a product delivery through a carrier, a shipment record that resides within the ERP must be manually entered into the shipping management software. From that point, key information about the shipment, like the tracking number and estimated delivery date, is isolated in the shipping management software and unavailable within the company’s ERP or customer relationship management (CRM) programs. Customer service representatives cannot easily provide clients with status updates because they either don’t have access to or need to add extra steps to track down this information.
A DOP, which connects systems, including CRM, ecommerce, tax management, shipping management, budgeting, planning and others, unifies an organization’s back-office operations into a single view. In the example above, a customer service representative using a DOP could easily see delivery tracking and other information within the shipping management software because data flows freely between systems.
On a broader level, a DOP is critical to competitiveness because the consolidation of data from individual systems into a single, ERP-anchored system allows distribution company leaders a holistic view into all levels of business performance.
Benefits of a DOP
A DOP provides complete visibility into supply chain, labor, accounting and other areas of the business. Access to this comprehensive, accurate, real-time data dramatically improves wholesale distribution leaders’ ability to make effective business decisions.
Among others, key DOP benefits include:
- Reduced labor requirements. A DOP decreases the number of people otherwise needed to enter duplicate data into separate systems, validate the accuracy of data being pulled from multiple sources and manually combining disparate data for analysis.
- Improved inventory management. Inventory management functionality that resides in small components of the DOP are connected to provide a broad picture of supply chain and fulfillment. Distributors have constant access to inventory management data, including vendor shipping, in-house inventory availability, warehouse transfers and all steps along the supply and fulfillment process.
- Intelligent pricing. With a DOP, distributors gain insights into pricing effects, permitting them to increase profitability by adjusting and serving up the right pricing through the right channels to the right customers at the right time.
Overall, a DOP enhances marketplace competitiveness by enabling distributors to build more efficient and scalable processes that ultimately increase revenue and profits.
DOP Adoption: Where to Start
DOP implementation can take many forms and may reasonably be a phased, multi-year process. To move forward – and stay on track toward – DOP adoption, the first step is to develop a roadmap with help from a technology advisor that is experienced in helping distributors through the journey.
A DOP should be based on next-generation systems and tailored to each business’s goals, starting with a clear vision of what the distributor wants the DOP to help them achieve. The right technology partner will ask the right questions and provide recommendations and a phased timeline based upon the distributor’s unique challenges and priorities.
In some cases, the roadmap will include replacing outdated core systems to establish a foundation of next-generation DOP technologies. While a DOP can be integrated universally with all systems all at once, a step-by-step approach – where priority DOP components are integrated with select systems to start, with other systems merged in over time – best accommodates most organizations’ strategic and budgetary needs.
Few industries have experienced the level of disruption wholesale distribution has experienced over the last few years. The future holds ongoing change. Whether addressing labor concerns, inventory and supply chain issues or a focus on company growth, a DOP that allows systems to “speak” to one another and integrate across the business is a powerful tool for navigating change and staying ahead of the competition.
About the Authors:
Chris Cleary is Practice Director for Acumatica and Daniel Edwards is Practice Director for NetSuite at technology advisor Net at Work. Chris and Daniel help mid-sized wholesale distributors improve productivity, efficiency and profitability, unleashing the power of their business through digitally transformative technology. Contact them at [email protected] or [email protected].
