Distribution looks easy—just a matter of getting goods from point A to point B, right? Wrong. Anyone that knows anything about the industry knows that it is anything but—especially when you factor in risk, compliance and regulations. For example, consider US President Donald Trump’s recent steel and aluminum tariffs of 10 per cent on imported aluminum and 25 per cent on imported steel. While Canada has been spared for now, if this reprieve is only temporary the interconnected supply chain of many industries will be impacted in both countries—especially automotive.
Even when considering the easier aspects of distribution, you start to see just how complex the supply chain industry can be. For many distributors, keeping track of orders-in, orders-out and returns as well as delivering orders accurately and on time is no simple task. Combining real-time customer insights and order data may seem like the ideal way to simplify financial management and shipment processing, but it continues to be a major challenge facing all businesses, especially small businesses and start-ups.
Lykki CEO (Chief Energizing Officer) Calvin Johnson is no stranger to the trials and tribulations that come along with growing a distribution business in the digital age. What started off as a local home delivery business for Costco 30 years ago in Vancouver has become a successful office supply and food distribution company. But to continue growing and expanding the business to fit with today’s customer expectations, Johnson realized he needed to upgrade the company’s technological infrastructure.
“To continue with almost three decades of success, I knew I was going to have to reimagine the company by taking Lykki through a complete digital transformation,” said Johnson. With the massive wave of e-commerce competition affecting the industry, we knew our only chance of surviving was to make quick changes and innovate fast. By implementing Sage Business Cloud Enterprise Management (formerly Sage X3) and having The Answer Company as my strategic technology partner, I’ve been able to shift my business model and simplify business processes so that I can continue focusing my time on increasing sales and staying ahead of the competition.”
Research shows that many small businesses are challenged with calculating accurate costs for customer shipments, based on location and delivery preferences. The research also shows they face difficulties managing shipping with costly legacy systems that require re-entry of information—clearly not a productive use of time.
Understanding the challenges faced by the industry today, the Canadian government has decided to tackle this issue head-on by launching a consortium aimed at developing a global supply chain platform based on artificial intelligence and emerging technologies. Through SCALE.AI, the AI-powered supply chain consortium, Canada will be able to strengthen its leadership in AI, while also positioning Canadian firms for global advantage.
But what do we do until then? With all of the external pressures, companies are currently dealing with, it’s critical that retailers and distribution companies stay agile and flexible—all without eating into their margins. Below are a few key ways organizations can simultaneously deliver low cost and high-quality products while providing an excellent consistent customer experience.
Effective planning and management
As highlighted above, today’s businesses are facing increasingly global and turbulent market forces. The ability to adjust processes, information flow and operations through the supply chain is vital. The deluge of data birthed by the digital age is also proving to be a gift as much as a curse for many as they struggle to efficiently collect, process and action the data available.
Many of the issues often lie with the complexities and constraints of having vital information spread over various technical solutions. Data is often siloed in different software solutions that have not been designed to work together. As a result, time and resource that should be spent on serving customers and growing the business is unnecessarily spent on forcing integration between these solutions.
The cost and intricacies of implementing and maintaining these integrations have led many organisations to compromise choosing one solution over the other, or suffering from more basic functionality through a limited integration. But thanks to ongoing technological developments, many of these issues are being addressed. Organisations of all sizes can now access all the benefits of their data without being hampered by the technology.
For distribution companies, in particular, adopting integrated best-of-breed solutions brings a range of benefits including cost reduction, efficiency gains, better competitive advantage and an improved customer experience.
For example, a recent Forrester study found that distribution companies saw a huge 237 per cent return on investment (ROI) in just four months by implementing effective business management solutions. As well as receiving significant ROI in a short amount of time, services companies also reported strong improvements in financial management, purchasing, inventory and services management, customer service, and sales management.
Technology is evolving
The cloud and IoT are giving companies the power to have the best combination of a variety of solutions without the complexity and cost. IoT, as one example, is introducing opportunities to leverage physical equipment sensors to not only manage the equipment’s function but also provide the appropriate context in the supply chain and financial operations of the business. This increases the value of creating a connection between the Enterprise Resource Planning (ERP) and Enterprise Asset Management (EAM). The power of IoT potential, complemented by the decreasing complexity of integration through cloud solutions, makes this a much more palatable proposition to enterprises from a cost and complexity standpoint.
The improved accessibility, functionality and integration of these solutions, many of which were previously only available to large enterprises, means smaller distribution businesses and start-ups can now begin to reap the benefits. With minimal investment and resources, distribution companies of all sizes can enjoy rich, integrated functionality to support all core business processes. And these processes can be easily adapted to fit particular company processes, roles and preferences.
By streamlining processes and integrating solutions, distribution companies stand to gain a range of advantages. But particularly, it will free employees from mundane tasks, enabling them to deliver the experience today’s impatient customer demands.
Paul Struthers, EVP & Managing Director of Canada, Sage.
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