WINTER 2024

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THE DISTRIBUTOR’S LINK
NELSON VALDERRAMA OUTDATED SALES PROCESSING AND MANUAL PRICING COST MORE THAN YOU THINK from page 66
I still marvel at their ability to answer calls, take notes,
maintain calendars, and follow through. I’ve been even more
impressed that a single person often handles all these
tasks. However, I also see problems with this operation.
What’s Wrong With Tradition?
Tradition certainly has its place. It standardizes
procedures that affect inventory and pricing. I’m
concerned, however, with how it can become inflexible.
Standard operating procedures often miss sales and
pricing opportunities. They risk underpricing unnecessarily
or incorrectly. And they feed inconsistencies across the
related business functions.
Standard operating procedures may determine a
distributor’s operational behavior. They may keep everyone
on the same page and following the same direction.
To me, this discipline limits innovation, collaboration,
and development. It does not recognize the need to
revise strategies for changing how markets and evolving
consumer demands. Traditional methods risk becoming a
legacy that businesses find hard to shake.
What Do Outdated Processes And Manual
Pricing Strategies Cost?
We are almost a quarter through this 21st century,
marked by fluctuating economic environments. Distributors
can’t survive and grow by sitting put and holding tight. Passive
postures and cautious moves will not reduce challenges.
Wholesale distributors must implement resilient
administrative and operational approaches, using
comprehensive data-based information gleaned from historical
transactions and current market trends. When distributors rely
on outdated sales processing, manual pricing, and inventory
replenishment procedures, they surrender to market forces
and lose their competitive advantage.
They effectively give up strategy to legacy behaviors
and “tribal” knowledge. They leave decisions to an
“old timer’s” memory and gut feelings. These legacy
approaches originated in Accounting principles, disciplines
that inform standard spreadsheets and Enterprise
Project Management (EPM) and Customer Relationship
Management (CRM) software.
However, these systems are one-way; people enter
data that other company functions need. They do not
look outward or forward. They don’t have ready access
to data on seasonal trends, customer buying patterns,
or accurate forecasting. Squeezed between sell-side and
buy-side pressures, they fall back on what they know.
However, falling back is no way to lead.
The customer buying model has changed in ability and
potential. Consumers know much more about B2B, B2C,
and e-commerce operations. Buyers have access to databased
product and company reviews. They have broader
access to available and competitive sellers. And they have
all the details needed to make a buying decision.
There’s Money In That Inventory, But …
Calling inventory an “asset” also presents some
problems. The distributor may “possess” inventory, but its
value depends on its ability to move from supplier to end
user. Wholesale distributors need the foresight and tools
to drive that movement effectively and efficiently.
I always think of the difference between booking
flights or hotels through a travel agency and online sites.
The travel agency offers pleasant personal service, but
booking online is fast and convenient. People have moved
toward booking online because they can do so from
anywhere at anytime, compare prices and reviews, and
explore a wide range of options and bundled discounts.
Moving inventory is a distributor’s core function, too
important to leave to “old school” methods. The ability
to manage operations with real-time, data-driven, and
accurate information will increase working capital, reduce
operations costs, and maximize margins.
What You Need!
Artificial intelligence and machine learning (AI/ML)
can optimize wholesale distribution, saving more money
than you think. These game-changing technologies dive
deep into a distributor’s transaction history, screening it
for decisions made across product lines, sales channels,
and customer segments.
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