Over the past few years, the phrase “digital transformation” has dominated the conversation across industries.
The concept concentrates on strategically and holistically adopting technology to boost efficiency, grow sales and increase customer engagement – with the goal of driving competitive advantage.
Ian Heller of Distribution Strategy Group invited a panel of industry leaders to talk about what they’ve learned in their digital transformation journeys:
- Carrie Busbee, CIO at Core & Main
- Darren Taylor, former SVP of Digital and Marketing at FleetPride and former CMO at MORSCO
- John Pehler, who held senior roles at Granger, Rexel and Caterpillar
Missed the webinar? You can watch the full show here.
Digital Transformation is More than the Shopping Cart
Distributors, said Heller, are radically underinvesting in digital tools because they’re overemphasizing shopping cart sales and its part in the mix. Many customers shop on distributor websites but then email or call in orders, meaning the website generated the sale but doesn’t get credit for it. Some distributors don’t focus on selling online but rather add value through a variety of important ways that go well beyond the typical purchasing capabilities of a consumer site.
Core & Main, a water, wastewater, storm drainage and fire protection products distributor, has expanded digital transformation beyond ecommerce. For example, Busbee’s team consults with municipalities to implement technical solutions for water conservation. One of the solutions was a digital proof of delivery platform.
They added geotags to delivered orders, a critical feature because many of their construction clients lack physical addresses. Busbee said it’s a great example of digital transformation, calling it “digital building blocks.” She continued: “For us, digital transformation isn’t big system implementations. It’s delivering the greatest value to our customers, and that all adds up.”
Pehler’s tenure at Rexel helped him see that digital transformation is more than just “Can we get an order through our website?” “I think it’s about all the ways that we connect and engage with customers to solve problems they’re experiencing in their business,” he said.
Digital transformation encompasses monitoring, planning, stakeholder buy-in, and the technology itself. He said the company tied technology implementation to key business goals. As part of this process, the company looked at the internal and external business landscape, asking key questions like, “What do we have the capacity and competency to work on now and what do we push aside and wait for the future?”
Digital transformation requires alignment between people, processes and technology.
“The biggest challenge is change management,” Taylor said. “You’re literally changing how your customers do their jobs. You’re changing how your salespeople do their jobs, the field, the supply chain, product management, pricing, everybody, how they get bills, how people get compensated. People are going to feel nervous about that. You have to meet this challenge head-on.”
What About Build vs. Buy?
Beyond the challenge of change management, another big question inevitably arises: Do we need to build a customized application?
“Make sure there’s a clear alignment of the build versus buy strategy to the company strategy,” Pehler said. “It’s not always an all-or-nothing approach. Some organizations have gone out and built incredible capabilities that are now available in the public domain. You can commercialize those quicker than you ever would be able to build a unique capability.”
Core & Main leans toward buying. “We call it our secret sauce,” Busbee said. “Why on earth would you think that the few hundred people inside your walls are smarter than the thousands of people outside your walls?” However, she noted, there are instances where the business requires a custom tech build.
“We have automated the blueprint drawings, taking those and converting them to bill of material, to quotes, then to sales order. Not many people can do the digital takeoff the way we do it. So, we do that, we build that, but we wouldn’t necessarily build visual AI on top of that ourselves. Why wouldn’t we use visual AI from someone else?”
AI and Digital Transformation
Should digital transformation always include artificial intelligence? Taylor believes distributors should “lean on your existing vendors but do it for strategic reasons and manage the risks around it.” He recommended AI implementation in “small pockets.”
While every business model differs, distributors are feeling increasing pressure to adopt these tools.
(Access now: The Role of AI in Digital Transformation)
“I am seeing questions that are coming in, and it could be the CEO asking the VP of IT or the ecommerce leader, ‘Hey, what’s our AI strategy?'” Pehler said. He said it’s important to approach the deployment of these solutions strategically. “It’s not just about implementing a technology; it’s about solving a real business problem.”
Busbee and her team started by evaluating the risks associated with AI. “That’s the first thing we did really was get our arms around the risks and how to control and manage those, share them with our board, and educate broadly across leadership. So, it’s the same as any other technology, but it has a lot more hype.”
Want more? Watch the full webinar here.
