In a business climate that continues to be characterized by disruption and volatility, powerful warehouse and delivery technology tools can help distributors turn the tables in their favor.
Ian Heller, Founder and Senior Partner at Distribution Strategy Group, played host to a panel of three warehouse and delivery technology experts who shared their experience, insights and best practices gleaned from working with thousands of distributors.
- Brian Gonzalez, co-founder and CTO at Curri
- Jody Phillips, Senior Customer Engagement Director at DCPerform
- Mike Clarke, Vice President of Sales at Infor
Five converging forces are forcing distributors to adapt:
- Customer expectations around availability, as well as delivery and returns continue to grow.
- Competition is tougher than ever.
- Distributors still face a shortage of skilled and qualified labor.
- We still have supply chain volatility — plus we’re dealing with the repercussions of the supply chain healing and warehouses in some cases suddenly having too much stock.
- We have inflationary challenges that mess with everything from business activity to pricing to managing inventory and inventory valuation.
Clarke noted the “Amazon effect,” as the retailer’s Prime delivery service has raised customers’ expectations sky-high. In Clarke’s words: “Everybody wants it yesterday.” If you can’t meet those expectations, it can have a negative effect on business.
The key to meeting that challenge is mastering new technology.
Gonzalez said that these days, “getting material to the customers when they need it is a superpower. Gone are the days of ‘I’ll have to you in three days.’ A new generation is starting to take over businesses, and they’re used to getting their burritos in 30 minutes. If you can’t make the delivery fast enough, customers start to shop around.”
Heller noted that this elevates the importance of efficiently managing warehouses and inventory.
Phillips said that “ease of doing business” is what customers are really looking for. That means not just quick delivery but the ability to easily make returns if the product doesn’t work. Customers have a lot of options, so the equation needs to be right: the ability to order the right product at the right time, with good visibility and communication around where the order is, as well as speed and accuracy.
Heller noted that in addition to expanding business options from Amazon and Walmart, marketplaces are now emerging that don’t carry any inventory — they just coordinate delivery. Many manufacturers are also now selling direct. If you’re a distributor, how do you respond to this kind of competition?
Phillips answered that it comes back to meeting customer expectations. Speed, accuracy and flexibility are what customers are looking for. And that depends on your execution systems — your WMS and TMS and labor management, as well as pushing further into automation and robotics to find new ways to satisfy these heightened expectations.
Gonzalez noted that customers can see right through your business if it’s not efficient, because that affects their experience. Customer service is key here — you need human fallbacks in addition to technology systems, because “oftentimes your customer just wants to call somebody and work it through in real time.”
There’s a bit of a paradox at the moment: We’re hearing about a lot of layoffs in the tech industry, but at the same time, unemployment is at a historic 50-year low.
Clarke pointed out that everyone is experiencing the same labor shortage, so it’s something we all must contend with. One key might be alleviating some of the menial tasks with bots and machines; that provides a better employee experience, which helps with retention. Thanks to the simplicity of the new technology, “it onboards easily. It used to be two months, now it’s 10 days.”
Phillips agreed that “it affects how happy people are — whether they’re driving a forklift or pushing a cart around doing picks.” Something as simple as shortening the walk time for an employee can improve their personal quality of life. As Heller noted, employee satisfaction also leads to customer satisfaction.
Engaging not just the C-suite but all employees in looking toward a more automated future helps tech-savvy younger workers see that there’s a better path ahead, which helps get everyone “pulling the rope in the same direction.”
All the panelists noted the benefits that automation and robotics can bring, and the importance of embracing those capabilities. But the consensus was that automation alone can’t solve all the problems distributors are currently facing. Some much-hyped technologies, like autonomous delivery vehicles, simply aren’t ready for deployment yet.
Also, as Gonzalez said, under the current economic pressures not all distributors can afford to make the investments they’d like to in “bright shiny objects.” In the meantime, there’s no substitute for the basics of cost reduction, optimizing sales efforts and improving customer service.
Phillips said that when it comes to the highly useful robotics options that are out there for things like picking products and moving pallets, excellent flexible solutions are available that are “basically robotics as a service. So, if you need, for example, 22 robots nine months out of the year, and 50 robots the other three months because you’re in a peak, they’ll do that, and they flex up and down with you.” That can help with budgetary considerations.
Phillips also said that when it comes to the actual bots that are available, “they all look pretty similar. It’s a pretty similar technology that’s going to lift a pallet or pull a product from a specific location,” although some do have specialized functions.
But the most important thing to look at when leveraging a robotics provider is the system they use, “because it’s that system that’s really going to bring out all of the optimization in working with your ERP and your WMS, and being able to leverage AI, machine learning, all of those things.” It’s the control system that’s the true differentiator, not the bots themselves.
Clarke said that integration is essential. “My advice would be to look for vendors who provide middleware integration. In our case, that’s ION. We have that and APIs for integration from the ERP to the WMS to the MHE, and that allows the multiple systems to work together effectively and efficiently.”
Training Makes the Difference
Distributors need to make more efficient use of the systems they already have in place. Phillips said that many times he’s visited distribution centers or fulfillment sites and found that they’re simply not leveraging the full capabilities of their system — which winds up having an impact on the bottom line.
Sometimes it’s because team members wind up being trained by someone who’s not a professional. That happens because, as Gonzalez said, successful team members tend to get promoted upward.
Phillips said that when a new system is first implemented, everyone’s excited and there’s comprehensive training — but when the people who were originally trained on the system move on, their replacements don’t get the same level of training because the system is no longer new. Over time, true knowledge of the system fades, and opportunities to make the most of its capabilities are missed.
Distributors must prioritize ongoing education and make sure that new team members get professional training as part of onboarding, rather than just being shown the ropes by another team member.
Tapping Into Expertise
With so many technologies available, how can a distributor assess what they need— so they don’t buy a bunch of things that will be outmoded in two years?
In response, Clarke spoke of the importance of leveraging resources — and in some cases that means the vendors themselves. He added that Gartner does a good job of highlighting companies that are doing things well that you can look to for inspiration.
Gonzalez gave an unconventional but valuable piece of advice: Tap into your employee base.
“You probably have a guy or gal who worked at your competitor, and then your competitor’s competitor, and then your competitor’s competitor’s competitor, and they’ve built up this great network.” You can ask them what they’ve learned along the way about the technologies they’ve used.
Phillips emphasized the value of leaning on partners and partner alliances. It’s important to have strategic consultations with experts who really know the space and can help you chart a path, fleshing out your vision for five years down the road or more.
It’s especially critical to make sure that “the decision-makers, the folks who are signing the checks” are involved. Phillips said: “It can’t just be operations; it has to be the business side and procurement and demand planning. Because if everyone’s not involved, someone’s going to get left behind. And that’s where you start losing the leverage that systems and automation and robotics can give you.”