AI has the potential to transform how distributors operate across their businesses.
Jonathan Bein, Managing Partner of Distribution Strategy Group, led a discussion on where distributors have already started applying these tools:
The panelists included:
- Arjun Srinivasan, Director and Head of Data Science, Wesco International
- Brett Gaviglio, Director of Engineering, Vertical Systems
- Tom Ward, IT Systems Engineer, Porter Pipe and Supply Company
Missed the webinar? You can watch it here.
AI in Distribution Sales
Gaviglio’s company, Vertical Systems, went from no CRM to an AI-powered customer relationship management platform. Before adoption, their sales teams managed customer relationships with Google sheets and paperwork. They priced individually and the process, which lacked systematization, was laborious. “We would go through a whole bunch of Google sheets to figure out what Johnny sold; what’s Jack going to do?” Gaviglio said.
In their search for a new CRM, they looked for a way to consolidate their rich customer interactions into a coherent whole. After implementation, Gaviglio said, the business automates routine sales actions, tracks data by manufacturer, and can pull up activities by order, sales stage and sales rep. The CRM also generates notes during meetings, thanks to its generative AI features.
Porter Pipe and Supply Company uses AI to drive more cross-selling. “It’s driving business from all different directions,” Ward said. It’s also helped the distributor “ensure we’re not forgetting stuff that’s been on a shelf in one of our warehouses for several months at a time.”
The distributor’s recommendation engine offers an additional item in an online shopping cart, for example. It also can recommend products for an inside salesperson’s pitch by phone. Recommendations are also delivered via mobile, so an outside salesperson can see products in real-time.
The benefits of using AI in this way not only include more revenue but greater customer loyalty. “Let’s say you have a customer that has been coming to you for 10 years for this one thing all the time,” Ward said. “But there are upsell opportunities to add to that order. With AI, all those things are suddenly right there.”
Without AI, the distributor’s sales effectiveness depended primarily on the longevity and experience of the sales rep, he said. Ward found the AI product recommendation engine to be a great equalizer between inexperienced and senior sales reps. That means even the newest sales rep could get up to speed faster. The impact on revenue could be substantial.
At the same time, the move to AI forces distributors to update legacy processes and technology that have been holding back their productivity. “We had to move our ERP into this decade. These are all things that organizations must think about,” Ward said.
AI in Distribution Pricing
Most distribution pricing depends on historical trends. But AI can make pricing far more dynamic, making pricing more of a science than an art.
“It’s changing from descriptive to predictive,” Srinivasan said. “AI platforms are evolving to take historical transaction data, CRM information and market signals, such as competitor pricing, to come up with a more accurate product pricing matrix.
“What are the changes coming? What are the trends that you anticipate so that you can price and prepare for that accordingly?”
The bottom line: AI can help distributors be proactive on price.
AI in Inventory Management
Srinivasan’s company is moving from traditional spreadsheet-based analysis to looking at more granular data with its AI-powered platform, including leveraging AI for better inventory management.
AI can help distributors forecast who will buy what product, spot customers at risk, and improve demand forecasting.
“I want to do that 80/20 product analysis and then hold the high-velocity products in my inventory,” Srinivasan said. “Being able to slice and dice it at the SKU, product and customer level would give you that look forward to how I can win this customer because I see they’re at risk of churn. AI lets you drive revenue opportunity, and then it lets you save product costs.”
AI in Administrative Workflows
Automation holds the potential “to add time back to the shop floor, time back for the sales staff, and it’s also taking care of the impediments to sales or delivery,” said Ward. Distributors often need to scan documents, including invoices, purchase orders, delivery confirmations and contracts, as part of their day-to-day operations. AI can automate these processes, significantly reducing human error.
These are high priorities for his company: to tackle these tedious tasks by applying automation to speed workflows and ultimately increase product sales.
“It’s one of those jobs that gets done last, and it typically doesn’t always get done well because the last thing you want to do at the end of your shift is go scan 80 documents to make sure that they get classified right, especially when you just spent eight hours loading and unloading trucks,” Ward said. “AI can tackle the paperwork and filing problem without increasing staff overhead.”
Srinivasan said automation keeps getting better. “The intelligence in these things is increasing. They can recognize fields with all kinds of formats and templates. You don’t need to do a lot of annotation and labeling, which was quite a cumbersome process in the past. However, pattern identification has become much easier with the advent of generative AI and large language models (LLM). Distributors will incrementally see more productivity as these things get more intelligent.”
