Disintermediation, also know as ” cutting out the middleman” in the supply chain, is a growing trend impacting many in the wholesale distribution industry. This is particularly true for those that are not a prominent part of the distribution channel or companies that offer very little value-add in the supply chain. Here’s how the right ERP for distribution companies can provide a solution for smaller distributors to remain competitive in this changing market.
For SMB distributors or those trying to expand into new markets, it’s hard to compete in the market with the large retailers doing their own distribution. For example, big retailers like Wal-Mart, Home Depot, Amazon, and Costco buy their merchandise directly from the manufacturer and then store and distribute their own goods to their stores.
According to Hoovers (a division of the D&B company), superstores and warehouse clubs hold 60% of the general merchandise sales, and direct manufacturer sales account for nearly 30 percent of total wholesale trade in the US.
Because of this, wholesalers face the challenges of creating a greater value for their services, consequently making the retailers decision to switch difficult. Having long-term relationship is not always an assurance that the retailer will stay. Finding new niches or ways to set yourself apart has become the norm, for example:
- Offering drop shipping on items which can allow retailers to order at the last second.
- Offering discounts for deliveries that are made at off peak times.
- Carrying specialty items that can only come from your company.
Further, many distributors have added value-added services such as installation, repair, rental, or light manufacturing to offer their customers as compelling reason to choose them over the competition.
With the right ERP for distribution, you can easily take similar measures to differentiate your company from the competition. Further, ERP allows you to increase customer service and satisfaction through the use of customer portals; just another reason for your customers to stay with you as they will be able to log in to view order, invoices, etc. which eliminates frustrating games of phone-tag and makes information available to them 24-7. Making your company easy to work with is probably the number one thing you can do to attract and retain customers. ERP can help you do that in many ways.
For more detailed information on this and other ways distribution ERP can help you survive, thrive, and flourish in the wholesale distribution industry, download the whitepaper below.