Leap Past the Lull

April 1, 2008
Distributors who respond to the slowing economy by embracing new ideas can set themselves up to prosper when the turnaround comes.

There is nothing like a downturn in the economy to separate the distributors who see the glass as half full from those who see it as half empty. While there is no question that tough economic times put a strain on all businesses, those distributors that view this slow period as an opportunity will emerge from this cycle stronger and in a better position to take advantage of what comes next.


You hear it all the time: distributors only use 20 to 30 percent of the functionality in their ERP solutions. Sure, some of that functionality doesn't apply to your business, but there is a good chance that at least another 10 to 20 percent would.

You invested in the system to help streamline your business processes. Now, when things are slower, is a good time to invest in some training to help you maximize your return on that investment.

For example, when the economy was booming, it might not have mattered as much that your accounts receivable (AR) days outstanding were a bit higher than you like — you easily made up the difference in sales to other customers. But now, shortening your AR cycle could make a big difference to your bottom line. Implementing the AR tracking functionality in your technology solution could help you reduce those days outstanding without needing to hire additional staff.

One of the advantages of the Internet is that training no longer has to be a costly expense involving travel and several days of commitment. Training, either classes or with a consultant, can take place online for just a few hours out of your employees' day — allowing them to get back to work and apply what they've learned immediately. Your return on investment is practically instantaneous.


Perhaps it has been several years since you've upgraded your technology solution. It has worked well in the past, so why try to fix what isn't broken?

The truth is, with so many advances in technology over the past decade, you could be missing out on some powerful functionality that could mean a big difference to your bottom line.

While initially, the thought of investing in a new ERP solution in a down economy may seem daunting, if you think about it, there really is no better time. With things slow, you and your employees have time to review all of the options available and make a decision based on your current and future needs. In addition, you can take the time to train on the new system so you and your staff are ready to hit the ground running when the economy rebounds.


Even if you are satisfied with your current ERP system and the functionality you get out of it, there is still technology available that can enhance your bottom line.

Many distributors with Web-based storefronts brag that 5 to 20 percent of their sales come through their website. Web-based storefronts allow you to reach more customers without opening new branches or hiring new staff. By tying your storefront to your back-end solution, you can enhance customer service by allowing customers to view their invoices, order history, etc., without intervention from you customer service representatives — freeing them to cultivate additional customers for you.

Internet trading networks enable you to create partnerships with fellow distributors. These partnerships can streamline sourcing, allow you to expand your offerings without increasing warehouse space, and, perhaps most lucratively, buy and sell dead stock.

Introducing an e-commerce solution to your business, whether it be a Web-based storefront or an Internet trading network, opens you up to markets previously unavailable, and it all can be done without the expense of additional staff or warehouse space.

Regardless of whether you see the glass as half empty or half full, how you choose to react to a slowed economy can make a big difference in how you prosper in the future.

Frank Heenan, director of marketing and product management for Activant, is an expert in software for wholesalers. He can be reached at [email protected] or 1-800-776-7438. Activant provides distributors with the software and services they need to increase sales, improve customer service, and reduce operating expenses. Find out more at http://distribution.activant.com.