The arrival of this intelligence—AI, AGI and super intelligence—is the most important thing that’s going to happen in 500 years, maybe 1000 years in human society, and it’s happening in our lifetime. So don’t screw it up!
—Eric Schmidt, former Google CEO, and chairman. April 11, 2025, TED2025
The challenge with a sweeping, dramatic new technology like AI is that its effects are extremely difficult to predict. Consider these common contradictions:
- AI is in the Gartner hype cycle and will hit the trough of disillusionment soon. No, it won’t – AI is different; if anything, it’s underhyped!
- AI will take over the world and destroy humans. Nonsense! It’s going to help us cure all diseases, including cancer.
- ChatGPT is amazing! No, it makes mistakes and its writing sounds wooden. Also, it’s bad at math. But wait, its deep research capabilities are incredible!
- AI models are going to need 90 gigawatts of power to keep developing and that’s 90 nuclear plants we don’t have, so it’s going to grind to a stop soon. No – the Chinese developed DeepSeek with more efficient algorithms; that’s the way around the power problem!
- Open-source AI like China is pursuing is the best model. No, it isn’t! It gives too much power to bad actors; the U.S. model of closed systems is safer!
- AI is going to displace hundreds of millions of jobs and we’re going to have an unemployment crisis. Well, that’s only a crisis if you think work is essential for people – how about we establish a universal basic income?
Who’s right in these arguments? I have opinions; you do, too. But no one knows for sure. We’re all speculating. And, I’d argue, very little of what’s in each of these bullet points is under your control. There’s so much capital and energy and computing power and human effort being thrown at AI by so many players around the world – public, private, in every industry and sector – that no one can possibly know what the world will look like with another 5 or 10 years of AI development.
So, while these are interesting topics and, as responsible citizens, we should keep up on what’s happening with AI, as distribution leaders, the most important thing we can do right now is to block out the noise. And focus on:
The One Thing Distributors Must Know about AI
Whatever else happens in the world, your competitors are going to use emerging AI tools to drive performance and efficiency improvements in every part of their business. If you don’t keep up or stay ahead of them, you’re going to erode competitive advantage either through reduced performance or efficiency.
Consider this quick list of current in-market AI-enabled solutions for distributors:
| Function | Use Cases |
| Sales | Efficient, smart CRMs that drive sales productivity |
| Marketing | Marketing automation and content creation tools |
| Payments | Easier tools for customers to pay you, track their accounts, etc. |
| Customer Service | Smart agents to answer technical and business questions |
| Order Processing | Automation that turns around quotes and orders in seconds |
| Inventory | Smarter forecasting tools that drive up service levels and turns |
| Warehousing | Robots that lower costs, improve safety and space utilization |
| Delivery | Better, more efficient routing, eventually with autonomous vehicles |
| Human Resources | Better talent management tools but fewer headcount overall |
| Accts Receivable | Smarter credit and collections for better cash flow |
I wrote that table in 5 minutes off the top of my head based on recent discussions I’ve had with technology companies. I’m in the business of understanding how technology can help distributors succeed and I struggle to keep up because it’s all changing so fast. How are you doing with it?
If you’re a distribution executive, you can watch TED talks about the impacts of AI on humanity; you can debate whether AI robots are going to be like R2D2 or the Terminator and you can worry over whether our new AI overlords will eventually look upon humans and pass judgement that favors our existence or not. But if you don’t apply these new technologies as faster or faster than your competitors, you’ll be having those discussions while you’re unemployed because your board of directors will find a more focused and aggressive individual to do your job.
Declutter and Focus
I don’t see any scenario in which the core activities of distributors will be made obsolete by artificial intelligence. Distributors provide this value to the channel:
Assortment convenience: A wide assortment of products from many manufacturers so that customers can consolidate their purchases efficiently and effectively.
Fast fulfillment and delivery: By holding inventory, distributors can get products to customers quickly.
Bulk-breaking: Distributors allow manufacturers to produce efficiently in large quantities while allowing customers to buy small lot quantities effectively.
Demand generation: Distributors use websites, sales reps, email, and other marketing tools to advertise the products of many manufacturers effectively to a large number of customers and prospects.
Customer service / technical support: When customers have questions, need service or advice, distributors have trained employees who can help them.
Credit and financing: Businesses like to buy on credit because it’s more efficient and cheaper than using checks or credit cards. It also smooths cash flow for companies that need products for customers who will pay them later.
Distributors face risks, like retailers entering the industry, manufacturers taking on some of these capabilities, but ultimately someone must provide this set of value-added functions in the marketplace. Nothing I’ve seen from AI fundamentally changes this reality. That means your existential threat from AI isn’t that it’s going to make the distribution industry unnecessary, but that your competitor will make your distribution company unnecessary.
That’s liberating because it means you don’t have to worry about some black swan event wiping out the industry. You can do what you’ve always done and that’s to continue to build a better distribution company, only you need to do it faster than ever and apply much more technology to your problems and opportunities.
When it comes to your business, declutter your mind about AI. Focus on finding AI that makes your company better. Do it better and faster than your competitors.
Where to Start
There is exactly one major distribution industry event about AI and it’s our upcoming conference, Applied AI for Distributors. It’s June 24-26 in Chicago and you have lost your mind if you aren’t attending or sending someone to this two-day immersion in AI. As you can guess by the name, the focus of the conference is to help you understand what AI technologies are available today, how other distributors are using them and how you can apply them to build a better company.
This event is likely to sell out, so sign up soon. We have good discounts for more than one attendee from the same company, so do yourself a favor and bring some colleagues. I hope you to see you there – and not just your competitors.
Ian Heller is the Founder and Chief Strategist for Distribution Strategy Group. He has more than 30 years of experience executing marketing and e-business strategy in the wholesale distribution industry, starting as a truck unloader at a Grainger branch while in college. He’s since held executive roles at GE Capital, Corporate Express, Newark Electronics and HD Supply. Ian has written and spoken extensively on the impact of digital disruption on distributors, and would love to start that conversation with you, your team or group. Reach out today at iheller@distributionstrategy.com.