A few years back, I was invited into a panel discussion at distribution conference at which all the best known distribution software companies were represented. The moderator asked us this question:
“Are most distributors on board with implementing a new ERP, supply chain or other distribution software solution to help them grow and improve future performance?”
My answer was:
“Regardless of the reason, distributors go into new distribution software acquisition and implementation kicking, punching, biting and fighting – reluctant every step of the way.”
Half of the people in the room decided right then that I was the “doomsday guy”. The other half rolled their eyes as if I were just saying this for shock value. So, why did I say this? Because it is true.
I’ve worked for, with and around distributors throughout my entire career. I’ve spent time on each side of the table, both as a buyer and a seller. I’ve participated in distribution software selection and implementation with more distributors than I can count and never once did the buyers have the same enthusiasm as the sellers.
Why the anxiety?
Distributors experience the same anxiety about software acquisition as everyone else. Purchasing an enterprise solution always results in writing a big check, late hours and serious pressure to succeed. But, it’s more than that. In my experience, distributors push back harder than others when it comes to replacing ERP or other enterprise operational solutions and I have ideas about why…
IT Generational Gap
Large distributors don’t pop up overnight. Often, their Internal IT teams grew from the ranks of employees over the years, so their knowledge is based entirely on the existing product mix. They have become experts at keeping their flavor of distribution software running, creating reports and other day-to-day requirements. They are not up to date on new infrastructure and modern distributor requirements and in many cases do not have the expertise to support new software.
As a result, the team is in no hurry to move their cheese. Worse yet, distributors mired in older legacy software solutions often have a difficult time attracting younger employees just out of college. Recent bachelor and MBA graduates with degrees in IT realize that working with software from the 80’s or 90’s isn’t a great way to start their careers. As such, IT organizations are unable to create a healthy balance between younger and more experienced employees.
Highly modified or “home grown” software solutions
A distributor’s existing software may meet the firm’s present needs, since it is modified to do “exactly” what they need, but does it meet their future needs? As we have seen over the past few years, businesses evolve rapidly to meet the consumer’s climate. On top of this change, industry requirements are changing in order to catch up. Unfortunately, old distribution software usually does not mix well with new technology. So when new software needs to be installed out of necessity to survive, a lot of issues can arise.
In many cases, there is no documentation of processes or previous work. This is a major issue when training new employees and an even bigger challenge when coding is needed to make any new updates and additions to the software.
The Bait and Switch.
Fool me once…shame on the software reseller. When they last purchased distribution software, they were sold a bill of goods. Back in the “good old days” the joke was – “you bought the demo not the software”! Think about what this means. Many legacy solutions were actually more manufacturing-focused than supply-chain focused. Yes, they had finance, inventory and order entry capabilities, but they were not for distributors. Distribution was viewed as the step-child of manufacturing – a remote stocking location!
We can’t afford it
The delta between the cost of the last implementation and today’s new costs can be perceived as almost insurmountable to ownership. How do you justify using some of that slim margin for a true unknown such as a new software implementation? To make matters worse, that last implementation was likely 10, 15 or even 20 years ago when software and services were much less expensive.
Consolidation within both the software market and the distribution sector has made these buyers gun-shy. The constant flow of software acquisitions over the years have confused potential users about software ownership, functionality and future viability. Distribution industry consolidations and acquisitions often cause delays in new software decisions. Why buy software if you are hoping to sell your company in the next 12 months?
Personal and professional costs
Career stability and advancement are major factors for decision makers. The company will invest a huge amount of money based on their recommendation. How will the firm react if it is the wrong decision? The distribution industry is a close-knit circle. How will their reputation be impacted if something goes wrong?
So why move forward at all?
Easy. Just look around. The opportunity for distributors to improve revenue, margins, performance and customer loyalty through the smart use of technology has never been greater than it is today.
Advances in cloud computing make it easier to align operations across locations as distributors expand nationally or globally. Distribution software has become more user-friendly and customizable to help companies bridge the gap from older legacy systems to newer more efficient systems.
Most importantly: Buyers expect distributors to provide a seamless, modern digital experience with the same bells and whistles they get with apps downloaded for free on their smart phone. New employees are no different. Anyone under thirty has grown up in a digital environment that lends no quarter to those behind the curve. In an industry with razor-thin margins and competitors around every corner, only those that maximize the use of modern technology and provide the best possible customer experience will thrive.
Curated from Microsoft’s Distribution Software Portal for Enterprise Solutions
Both the consumer and the workforce population is changing. The workforce is aging and tech savvy millennials are entering as both consumers and employees. Customers today expect an experience that’s tailored to their needs that is seamless and delivers right away. They want to feel valued as customers and when they believe services and products are not up to par, they have a voice and also importantly a choice, their feedback is instant and swiftly posted on brands’ or third party social networks. This changing demographic means CPG and Distribution companies must have the infrastructure and talent to connect with customers on their terms. It means they must listen, learn, and respond using tools that integrate across channels.
But, comfort and trust grounded in industry expertise is a must in order for distributors to move forward with new software acquisitions and implementation. Without trust and demonstrated experience, no amount of IoT, analytics or fancy demos will convince companies to switch systems. It is on those of us in the software industry to prove our worth.
I truly believe in AXIO for Distribution from SBS Group. We’ve applied industry best practices for distributors and made everything available in the cloud to minimize cost overrun exposure. This is a modern software solution built on distribution principles and implementation expertise. AXIO for Distribution paired with our distribution industry expertise is a pairing worthy of your attention. Trust us with your company, you don’t have to dread our innovative solution.
Dominic Telaro CFPIM, CIRM
Vice President Industry Solutions, SBS Group
Dominic Telaro brings over 35 years of Manufacturing, Distribution, Software and Consulting experience. Half of his professional career has been in Manufacturing and Distribution from shop floor and warehousing positions to management. During this time he implemented ERP, DRP and Logistics solutions as internal Project Leader. The second half of his career has been in consulting, product management, product development and both consulting and software sales. He has held positions as VP Of Industry Solutions, VP of Product Development, VP of Sales and Marketing and Global Practice Leader for companies like IBIS Inc., IBM, Janis Group, Metamor, Marcam Corp. and more. Presently he is responsible for Industry Product Vision for multiple ERP solutions at SBS Group USA.
APICS Fellow and Certified in Integrated Resource Management, Instructor at Universite de Montreal, Vanier College and Granby CEGEP for APICS certification; Lead instructor for internal APICS training at Bell Helicopter, Avon, Le Groupe Hamelin