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The Upside of a Down Economy

Dec. 1, 2008
Here's how electrical distributors can take advantage of an economic downturn.

Although a slow economy means down time for many distributors, now is the time to invest in people and systems that will help you get through any current difficulties and position your company to profit from the rebound that's sure to come.

New enterprise technology can assist electrical distributors in getting through difficult economic times, because distributors can leverage functionality that allows them to become easier to do business with. They can use new technology to make the entire ordering process easier, thereby promoting customer loyalty. New system capabilities can also help distributors buy better by ensuring that they take advantage of every possible supplier discount and help them collect special pricing authorizations (SPAs) from suppliers. Additionally, new technologies enable distributors to replace low-value activities with ones that provide greater business benefit.

Taking advantage of new enterprise technology is not new to the wholesale distribution industry. Many distributors have already put new enterprise technology in place to drive superior performance and profitable growth. For others, however, the timing has not been right to improve their systems. Implementing new systems can be temporarily disruptive and may require moving some of their best employees onto the project. Good times or bad, most distributors run their businesses with lean head counts, and high operational demands during bullish economic times often prohibit them from investing in new systems.

The electrical distribution industry is full of very adaptive and loyal companies. During tough times, they generally do not often have major layoffs, because they prefer to retain the experienced employees they will need when transaction volumes pick up and growth begins again. Their opportunity to retool is now, during this economic slowdown. They can take advantage of this slower period to place experienced “subject matter experts” on projects that will help pave the way for profitable growth in the future.

Following a new system's implementation and the necessary post-“go-live” system tuning, many employees who were on the project get redeployed back into the business, adding new strategic business experiences to their existing tactical operational backgrounds and increasing their value to the company. When economic growth begins, distributors with new enterprise technology in place will be ready to grow profitably. The agile distributors that can leverage new industry-specific solutions will have an advantage over competitors that continue to rely on outdated and disparate systems.

In an economic downturn, traditional distributors face the challenges of streamlining operations, enhancing efficiencies and reducing overall costs. Midsize and smaller distributors are additionally constrained by time, budgets and resources. That's why it's important for wholesalers to utilize an enterprise solution designed specifically to meet the needs of the wholesale-distribution industry.

By clearly defining how the software will behave for standard wholesale-distribution business processes (best practices), system implementations are streamlined, minimizing business disruption and cost and maximizing enterprise-wide adoption and benefit. Imagine if you could support business growth of the future with distribution-specific functionality — not generic technology — that could execute on business decisions made from current information and rapidly adapt to new business requirements by changing process rules, not software code. Use the any downtime you may have during this economic climate to prepare your company for a prosperous future.

The author is an industry principal for Wholesale Distribution at SAP America. He is a wholesale distribution technology and operations leader with more than 25 years of comprehensive experience in distribution and logistics environments, executing operational improvement strategies through technology. He can be reached at [email protected].

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