Wholesale and Distribution: Emerging Trends in the Face of a Pandemic– October 07, 2020 by Roula Tsaprailis

While almost every entity and person has been impacted by the COVID-19 pandemic in some way, many businesses are taking to heart the lessons learned and rising to the challenges ahead. The wholesale and distribution industries are no different. While they certainly face obstacles, there are opportunities, particularly in the area of digital transformation, that can help them sustain through the downturn and potentially find lasting efficiencies and differentiators.

Analyzing “Who,” “What” and “How Much”

Demand interruption has abruptly shifted the product and customer mix for a majority of distributors. No one certainly would have ever thought we would see a shortage of toilet paper during a health crisis. But many businesses in the consumer sector found themselves with a shortage of inventory, causing them to reevaluate their transport and warehouse networks. As a result, some are looking to invest in higher inventory levels, while others are changing their method of inventory from “just-in-time” to “just in case” to better forecast their levels.

As the new normal continues to evolve, the wholesale and distribution industries will need to continue to reevaluate their product mix for a better forecast demand. That means digging into the numbers to better analyze the demand for products, including analyzing each product to track increases and decreases, and analyzing the customer mix as it relates to each product. During this pandemic some industries have been very successful while others have significantly weakened. Understanding who your customer is can help with inventory levels. Updated analytical software as well as inventory management software will also be key to this effort.

Digital Technologies and Process Automation

While there are always ways to improve the speed of product movement through your facility — such as removing obstacles in the path or better organizing your products within the warehouse — the pandemic has created both an interest and a need to more seriously consider automating key processes through digital technologies.
During mandated shutdowns, digital transformation seemed to move from a process that would take years to a mere few months. Warehouse, shipping and distribution trends all point to integrating technology to improve operations to aid in transparency, reducing delivery time, improving order fulfillment and making facilities safer. We see more and more companies in this space doing everything from acquiring new equipment that automates the movement of products through the system more efficiently, to finding new ways to digitally track their inventory for a more organized warehouse. Even standard storage spaces are continuously changing to meet the demands of consumers who need faster deliveries.

>> Listen to our podcast on “Using Technology to Transform Your Back Office”

Wholesale distributors are also starting to look more seriously at using robotics to gain efficiencies and cut costs. Robotics are used to help move inventory from one part of the warehouse to the other, retrieve products from shelves or convey products to the loading area. They can be used to measure inventory or identify parts. Drones have even been used to reach high shelves as a way to easily inventory certain items, taking a picture of the item description or number. And in today’s environment, robots can help maintain social distancing between the human labor force.

Robotic process automation (RPA) is another technology option that often is more available, or at least perhaps more budget friendly, to companies of all shapes and sizes. RPA software takes the robot out of the human by automating many routine and repetitive back-office tasks and processes that are low value and generally uninteresting to the employee. RPA mimics the activity of a human being but in a much more efficient, effective and accurate manner. A software robot (bot) is created that can learn to replicate and execute rules-based business processes. Bots can interact with any application or system the same way humans would, but can be done 24/7, much faster and with more precise reliability — freeing up employees for more strategic, high-level tasks and responsibilities.

Some of these technologies are in more advanced stages of use, while others are still in their infancy. Each entity will need to review their procedures and carefully assess their warehouse, working with outside consultants specializing in digital automation, to see where they can employ technology for the betterment of their entire business.

>> Read “Robotic Process and Intelligent Automation: How They Are Changing the Workplace As We Know It”

Online B2B Transactions

Wholesalers and distributors are seeing more and more online transactions from their business-to-business (B2B) customers. This makes the buying, and selling, experience a little different, because even though buyers want the convenience of online ordering, they often still expect and need a knowledgeable salesperson who understands them and their order needs.

Distributors will need to enhance their websites and online e-commerce options to ensure the experience for their customers is more customer driven then process driven. They need to continue to improve the ease of which customers can access up-to-date information, including the availability and pricing of products, and real-time order tracking. At the same time, distributors need to have a salesperson on hand to ease the journey, if necessary. The enhancement of online options is imperative for companies to not only sustain through the pandemic, but to boost their growth and open otherwise untapped markets for the future.

Blockchain Technology

Blockchain technology, most widely known for its use with digital assets such as cryptocurrencies, is another emerging area that will likely make a big impact on the wholesale and distribution industries of the future. Blockchain has the power to provide a method for sharing product information accurately and securely — such as who handled the product from beginning to end during the supply chain process. Think of an individual blockchain as a database distributed across a secure peer-to-peer network whose records are time-stamped, linked and accessible to all of its members, and only its members. Since all participants can access the entire set of records in real time, blockchain vastly speeds up transactions of all kinds, at very low cost, from coordinating shipping to tracking contracts to storing records.

Technology will continue to advance in the wholesale and distribution industries. While small and mid-sized companies may not currently have the budget for robots, they can impact their businesses by evaluating faster and smarter software technology capabilities.

Contact rtsaprailis@cohencpa.com or a member of your service team to discuss this topic further.

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Cohen & Company is not rendering legal, accounting or other professional advice. Information contained in this post is considered accurate as of the date of publishing. Any action taken based on information in this blog should be taken only after a detailed review of the specific facts, circumstances and current law.