Evolve or Perish: How Cloud Technology is Helping the Distribution Industry Stay Ahead of the Times
Becoming redundant is a major concern for many modern businesses that must thrive in a digital-first environment. The distribution industry is not free from these worries either. Today, most manufacturers are selling directly to consumers, through their websites and social media platforms making manufacturers and retailers question the need for a distributor. Take the example of Dell Computers and Tesla – two tech giants that have been able to successfully reach their customers worldwide using their websites, with minimal support from intermediaries.
To remain relevant, distributors must look to iron out issues within the system and break the traditional distribution mold using technology. Today, with the use of Cloud technology, many distributors are staying ahead of the curve by automating their workflows, scaling with ease, and making supply chains sustainable. This blog will take a deep dive into how Cloud technology can help your distribution business stay afloat in a sink-or-swim environment.
The Distribution Industry: Then and on the Cloud
The distribution industry as we know it today has its roots deeply set during the Industrial Revolution when the mass production of goods became the norm. Along with it, transportation networks through rail and water were solidly established allowing manufacturers to transport their products far and wide. Further on, at the end of the Second World War, to boost economies affected by the war, supply chains were created.
In the recent past, the pandemic proved to be an urgent wake-up call for distributors. For months, supply chains remained stagnant urging many in the business to use technology to set things in motion once again. Many distributors moved their operations to the cloud to avoid facing similar risks in the future and to ensure they can cater to the rapidly changing requirements of consumers. A report by Gartner indicates that more than half of enterprise IT spending in key market segments is expected to transition to the cloud by 2025.
Communicate with clarity
For distributors, communication between multiple parties and visibility across the supply chain is a cause for perpetual stress. The back-and-forth can be catastrophic if a high-priority message gets lost in a flurry of communications.
Cloud platforms provide a centralized repository for data storage, allowing distributed teams to access information from anywhere. This eliminates the constraints of physical location and ensures that all team members and stakeholders have real-time access to the latest data.
Babbitt Chainwheels serves as the perfect example. The Massachusetts-based manufacturer and distributor of chain wheels has been a leader in the industry since 1915. Given the complexity of the business and the scale of the operation, the business was struggling with a lack of data visibility and transparency. However, following the implementation of Infor CloudSuite Distribution, the organization has seen substantial improvements across ordering, purchasing, and warehousing. A 250-line item order that used to take them half a day to enter now only takes three minutes because it can be uploaded electronically and all stakeholders can gain access to this information at the click of a button – there’s greater clarity and better communication across the board.
If you are still only considering transitioning to the cloud, here’s why you may need to focus your efforts on this migration.
Scale and adapt with ease
Over the past few years, distributors have had to deal with one calamity after another. The end of the pandemic brought about an inflationary environment followed by conflicts that have had a ripple effect on the world; increasing the prices of fuel and obstructing trade. Given this volatile environment, if distributors haven’t implemented an agile and scalable system, they are bound to sink.
Cloud-based solutions provide on-demand access to computing resources, allowing businesses to easily scale their operations up or down based on demand fluctuations. This agility is crucial for distribution companies dealing with varying inventory levels and order volumes. The ability to add integrations and extensions to the existing cloud platform also lends to its adaptability.
Drillmex Inc, is a North American industrial distributor of cutting tools, machine tool accessories, cutting fluids, and precision instruments. During the past ten years, the organization experienced significant growth and decided to do more with less. Having implemented Infor CloudSuite Distribution, the organization decided to integrate a third-party e-commerce platform to drive online sales. Given that the company had several suppliers, the integration synced perfectly with the cloud platform to create greater visibility and drive sales more efficiently.
Manage data and gain better insights
Cloud platforms allow distributors to scale their data storage and processing capabilities based on demand. As the volume of data grows, they can easily expand their resources, ensuring efficient management without the need for significant upfront investments in infrastructure.
Being on the cloud also provides powerful analytics tools and services that enable distributors to derive meaningful insights from their data. These tools often include machine learning capabilities, helping distributors make data-driven decisions, optimize supply chains, and identify trends that could impact their business.
Moreover, cloud solutions offer easy integration with other business systems and applications. Distributors can connect their data with customer relationship management (CRM) software, enterprise resource planning (ERP) systems, and other tools, creating a seamless flow of information across the organization.
Midwest Wheel, one of the largest truck parts distributors in the Midwest, struggled with a lack of data visibility while its reporting created silos within the business and increased errors. Migrating to the cloud helped the company move away from manual data entry and age-old reporting methods to Birst networked business intelligence which provides real-time visibility in the form of a dashboard, allowing company leaders to drill down into specific product segments, territories, and numbers.
Cloud technology also supports the automation of routine and repetitive tasks, such as order processing, inventory management, and shipment tracking. By leveraging automation, distribution businesses can allocate resources more effectively, reduce human errors, and accelerate the overall operational workflow.
It also facilitates the integration of Internet of Things (IoT) devices and sensors within the distribution network. These devices provide real-time data on the status of shipments, warehouse conditions, and other relevant metrics. Cloud technology helps process and analyze this data, offering actionable insights for better decision-making.
For Vallen, a leading provider of integrated supply chain solutions and MRO industrial distribution across Asia moving to a multi-tenant cloud has many advantages. In terms of automation, it has supported the effortless creation of financial reports that were time-consuming in the past. Other approval workflows, involving customer quotes and purchase orders have also been automated. Vallen now benefits from better and faster decision-making in an environment where everyone has access to a single source of truth.
A key to surviving in a world that’s rapidly shifting is to adapt, to create new and better technology that can support growth. For distribution businesses, the time is now – by using Cloud technology most in the industry are scaling their businesses, automating their processes, and gaining data-driven insights to swim ahead in turbulent waters.
Keen to know what to keep in mind when migrating to the cloud? Here are some key decisions and activities you must prioritize.