It’s been a terrible few months, to say the least, with COVID-19 in our businesses, as well as the concerns we’ve all had for our families, friends and co-workers. But, this too shall pass — just not quickly enough to suit us all, I’m sure.
I expect that before the year is out, there will be a ton of surveys supported by the usual statistics and analysis addressing what distributors may have been thinking about — and plan to do — related to new business models and new innovations being thought through and adopted based on the business changes brought about by the pandemic. It’s the so-called “new normal.” Of course, there are a lot of opinions out there about what the “new normal” really means and when it will occur. Even “normal” may be a way off. One thing we can count on, however, is change.
Right now, many experts are writing articles, speaking on webinars and — before the lock-down — doing on-site seminars where they are suggesting the need for innovation and transformation of business models. While this has actually long been a topic of editorial comment, it now unfortunately is being discussed at a “35,000-foot” level by webinar sponsors and their invited speakers. While I do applaud their efforts and don’t want to sound too harsh in this article, these speakers have at times come across as just offering “keynote speech content” and don’t offer enough granular detail on how and where distributors should be focusing on innovation.
About three or four years ago, in the MCA Associates’ article “The Truth About Driving Innovation — What No One Tells You,” I wrote about the dangers of expecting company leaders to go back to their respective companies after attending some “rah-rah” aspirational session. It’s always good, I believe, to reflect on past history. For instance, an Aberdeen Group study published soon after the Great Recession as the economy began to recover described the significant reductions in discretionary spending, deferred projects and capital spending, and of course the elimination of jobs and/or the reduction of work hours. I made some suggestions at the time in my company’s article “Are You Ready for a Recovery?” and would be glad to send you both articles if you contact me at the email address at the end of this article. Similar actions to those discussed back then were taken during this current pandemic crisis.
So, what will happen this time around, as we go back to work and return to some version of “normal”? For those organizations that did little since the last crisis in the way of differentiating improvements in business processes, technology, organizational structure, etc., it may be “make or break time.” It may be a real challenge for small and some mid-size companies. These businesses have the distinct disadvantage of having fewer financial, human and real estate resources. Smaller organizations must actually make smarter, more precise but practical decisions with their available resources.
Innovation is achievable in phases if planned from the start as a way of mitigating business risks. Several activities within your “total value stream” may be involved. The value stream tracks a piece of business as it moves from initial order to cash flow, moving through sales and marketing, order quotation, order management, supply chain, warehouse/distribution, finance & cash flow and returns, corrections, etc. There’s a long list of things to think about as we emerge from this crisis, including the more granular considerations within your value stream mentioned above. Here are a few examples of them.
E-commerce adoption. One day, we’ll look back at this period as one that accelerated e-commerce adoption and business for everyone with a truly functional e-commerce site.
Centralized distribution. Distributors must move toward a different type of centralized distribution network that provides opportunities for inventory reduction, even better service levels and distribution cost reduction. These success factors don’t always have to be in conflict with one another.
Supply chain management. Will the use of re-order points and min/max (the “conventional wisdom”) still be relevant considering the limitations of demand forecasting and when most companies are typically swamped with safety stock?
DC/warehouse productivity. If you are primarily utilizing pallet racking and standard shelving, you’re missing a great opportunity, particularly if your e-commerce activity increases. The last few years has seen the introduction of several new warehouse design and materials handling concepts that save space by increasing product density, improve product picking accessibility and speed transport. Autonomous mobile robots (AMRs), with even more minimal capital expenditure requirements, can now provide a variety of weight capacity offerings.
Faster last-mile delivery. Your B2B customers, at another level, are also consumers (B2C) and will expect increasingly faster delivery. There are other practical delivery choices, such as delivery at night; very early (before 6:00 a.m.); and/or utilizing last-mile delivery services. Learn more about these newer options.
Potential restructuring of counter sales, inside sales and outside sales functions. If your counter business is relatively small (3% to 5% of revenue), you may want to restructure the responsibilities of your inside sales personnel to handle order taking; picking and filling the entire order; customer service/order status; and outside sales support so field reps can focus on developing new accounts, introducing new products and making more consultative sales calls. With this restructuring, outside salespeople will no longer just order takers. This crisis has generated a lot of creative thinking regarding changes to counter sales and “will call” initiatives.
Big data. Harnessing the power of big data will help you gain additional insights into your business. You need “business intelligence” data to support everything from marketing and sales to forecasting.
I am presenting an ambitious menu here. However, your innovation efforts, must occur “below the clouds” — not at 35,000 feet. You’ve got to be able to explain this transition to your people in more granular fashion.
In developing your plan, develop a well-defined “gap analysis” outlining the innovative leaps you’ll need to either catch up or take the lead from your competition. These initiatives will not be equal in effort or ROI.
You should have the confidence that your organization has the capability to close these gaps/points of differentiation as quickly as possible, or can engage partners with the required expertise to guide and assist in the development of your specific road map. It’s time to invest in your company’s future and develop a plan for innovation that will help your company survive and thrive post-COVID 19.