How wholesale distributors can benefit from automation
Your 20-second brief:
- Pressure from E-commerce growth: The expansion of E-commerce and direct-to-consumer (D2C) channels increases the demand for efficiency and responsiveness in wholesale distribution.
- Rising regulatory standards: The industry faces increasing sustainability regulations, particularly from frameworks like ESRS and GRI. These set benchmarks for environmental and financial impact reporting, aligned under the Corporate Sustainability Reporting Directive (CSRD).
- Labor and cost management: Automation helps distributors manage labor shortages and rising costs, streamlining operations.
- Real-time inventory tracking: Automated systems maintain real-time inventory visibility, reducing overhead and improving order accuracy, speed, and reliability.
As the world becomes increasingly interconnected, consumers’ purchasing behaviors have transformed, with more expectations placed on personalized experiences, rapid delivery times, and sustainability.
At the center of this evolution is the wholesale distribution industry, which acts as a vital bridge between manufacturers, retailers, and end customers. By purchasing goods in bulk and efficiently distributing them across multiple markets, wholesale distributors remove logistical challenges that manufacturers may face, allowing them to concentrate on production and innovation. This critical link in the global supply chain supports retailers by simplifying inventory management and ensuring a steady flow of goods to meet consumer demands.
As the industry continues to grapple with multiple challenges, this blog will explore how wholesale distributors can capitalize on automation to benefit both operations and productivity while remaining competitive in a global landscape. From real-time inventory visibility to faster order processing, read on to see automation’s potential in creating a supply chain that is equally smart, secure, and sustainable.
Not just one case for concern
Wholesale distributors work across industries and they face both overlapping and sector-specific setbacks.
- Labor shortages
Ongoing labor shortages present a significant challenge for wholesale distributors, impacting productivity and driving up operational costs. In the food and beverage (F&B) sector, a shortage of warehouse staff or higher numbers of itinerant workers can lead to delays in picking, packing, and shipping essential goods to retailers and restaurants. When fewer workers are available, distributors often face order fulfillment delays, higher overtime expenses, and an increased reliance on temporary labor, who may lack the specialized skills needed for complex tasks.
- e-commerce and D2C sales
The shift toward e-commerce and direct-to-consumer (D2C) sales has transformed wholesale distribution, as many manufacturers, for example in consumer electronics, now handle distribution directly. This change means wholesale distributors must adapt to a dip in demand, managing smaller, more frequent orders across diverse products, increasing pressure on their logistics and inventory systems.
- Supply chain volatility
Global disruptions, such as geopolitical tensions and adverse climatic conditions, have exposed vulnerabilities in supply chain stability, causing unpredictable delivery timelines. For F&B distributors, delays can be particularly detrimental due to the perishable nature of many products. In cases where supply chain disruptions lead to delays, the freshness and quality of products can be compromised, affecting relationships with retailers and end consumers.
- Transparency and customer requirements
There is a growing demand for end-to-end visibility across the supply chain, as customers expect faster fulfillment and the ability to track their orders in real-time. This phenomenon is present across industries from fashion to heavy machinery, and in the latter where delivery timelines can be lengthy and involve complex logistics, a lack of transparency can lead to customer dissatisfaction as missed deadlines can delay industry projects.
- Sustainability concerns
Distributors are increasingly under pressure from an eco-conscious public to adopt sustainable practices and minimize their ecological footprints. For wholesale distributors in industries like fashion, this is a pressing concern, given the multiple stakeholders involved across sourcing, production, and waste management.
Automation addresses these needs by enhancing data accuracy and transparency. For instance, automated inventory management helps distributors maintain optimal stock levels, minimizing overstock and reducing waste in line with sustainability goals. Additionally, in logistics, automated route optimization and demand forecasting reduce fuel consumption and carbon emissions, supporting distributors’ commitment to sustainability.
Where reluctance needs reflection
Despite these challenges impacting every aspect of the supply chain, many wholesale distributors are hesitant to invest in automation. This can be due to:
- High upfront costs and unclear ROI
Wholesale distributors often hesitate to invest in automation due to the substantial initial capital required. Implementing automated solutions, such as AI-driven inventory management systems, involves high upfront costs for software, equipment, and infrastructure upgrades. For smaller distributors operating on thin margins, these expenses can be especially prohibitive, as the long-term financial benefits may be difficult to justify against short-term expenditures.
Additionally, the ROI from automation can be challenging to quantify, particularly when benefits like increased productivity or reduced error rates are intangible or accrue gradually. This uncertainty around payback periods and profitability is heightened in sectors with unpredictable demand, where the impact of automation on managing volatility is harder to gauge.
- Resistance to change
Another barrier to automation is the cultural resistance within organizations. Employees may raise concern on new technologies that may displace their jobs, while management may hesitate to disrupt established processes. Transitioning to automated systems often requires a shift in mindset which can be challenging for companies with a long history of manual practices. This cultural resistance can slow down the adoption of automation as companies struggle to align organizational behavior with technological advancements.
- Skill gaps
Finally, the need to upskill or reskill staff to use new technologies presents a significant challenge. For wholesale distributors who may not have a tech-savvy workforce, the cost and effort required to train staff can be a deterrent to automation. Finding qualified talent to support digital transformation initiatives can also be difficult, as the industry competes with other sectors for skilled professionals in a tight labor market.
Solutions at hand
Despite such industry uncertainties that can escalate to issues of concern for wholesale distributors, automation can provide a suite of solutions through:
- Enhanced productivity and syncing processes
A core advantage of Robotic Process Automation (RPA) in wholesale distribution is its ability to streamline repetitive, manual tasks that drain resources and increase error risks. By automating essential processes like order processing, data entry, inventory tracking, and invoice generation, RPA reduces human intervention, thereby minimizing errors and enhancing speed and accuracy across workflows.
RPA can automatically validate order information, update inventory records, record stock movements, and trigger order confirmations in real-time, ensuring data consistency across systems without relying on manual updates.
Integrated with ERP systems, RPA also promotes a unified view of operations, supporting better decision-making and data consistency. Additionally, automated workflows for tasks like replenishment and order fulfillment further cut down on manual intervention, allowing for faster, more reliable warehouse processes. RPA’s scalability enables distributors to adjust operations based on demand, efficiently handling high volumes during peak periods without increased labor costs, which helps maintain flexible operations under varying market conditions.
- Improved accuracy
Electronic Data Interchange (EDI) that streamlines communication between distributors and suppliers while integrating with Infor M3 , significantly enhances accuracy by automating key processes in order fulfillment and inventory tracking. The EDI solution eliminates the need for manual data entry by automating tasks such as order submission, transaction validation, and order splitting, which minimizes errors associated with human handling. Additionally, real-time transaction updates ensure that inventory levels and shipment statuses are always current, reducing discrepancies and the time required to resolve them.
- Ensuring real-time data and visibility
The integration of a Warehouse Management System (WMS) ensures accurate tracking of inventory movements, including receiving, storage, picking, and shipping, which reduces discrepancies and improves efficiency. Global Airfreight International Pte Ltd, an international freight and logistics operator, implemented Infor’s WMS to unleash:
– Enhanced inventory accuracy: Real-time tracking across various stages of inventory management reduces errors, ensuring accurate stock levels at all times.
– Seamless ERP integration: Integration with ERP systems, such as Infor CloudSuite, promotes data consistency and provides a unified operational view, leading to better decision-making.
– Automated processes: Automated workflows for replenishment, order fulfillment, and updating order statuses eliminates time-consuming, error-prone manual tasks.
– Scalability to meet demand: The system’s scalability allows Global Airfreight to adjust capacity based on demand fluctuations, handling higher order volumes during peak seasons without increased labor costs and optimizing resources during slower periods.
– Cost reduction: Real-time visibility across stockpiles enables more efficient inventory management, which reduces costs for both the organization and its customers.
– Improved supply chain communication: Integration with B2B e-commerce platforms ensures that inventory data remains in sync across the supply chain, preventing stockouts and overstocking while improving overall responsiveness.
– Enhanced customer experience and partnerships: Faster, accurate logistical insights supports better customer service, strengthening client relationships; leading to new business partnerships.
- Meeting sustainability and regulatory requirements
Alongside consumer-driven demands, wholesale distributors must also meet specific sustainability benchmarks under frameworks like the European Sustainability Reporting Standards (ESRS) and Global Reporting Initiative (GRI), the former of which is mandatory in the EU, and aligned with the Corporate Sustainability Reporting Directive (CSRD). These frameworks require comprehensive, transparent reporting on environmental impacts and financial sustainability, directly addressing issues like carbon emissions, waste reduction, and resource efficiency to counter global greenwashing practices.
Automated reporting tools simplify compliance by integrating ESRS and GRI metrics into regular reports, ensuring quick, accurate sustainability disclosures. This allows distributors to meet the double-materiality perspective emphasized by both ESRS and GRI, accounting for business risks as well as broader societal impacts.
Key takeaways
Embracing automation can give wholesale distributors a much-needed competitive edge by addressing the key challenges of the day. Automated systems help improve efficiency by minimizing manual processes, getting workflows in sync, and enhancing visibility across the supply chain. Solutions such as Infor CloudSuite Distribution enable distributors to process orders faster, manage inventory better and reduce costs. Through automation, companies can not only overcome obstacles such as labor shortages, supply chain disruptions, and stringent sustainability concerns but also improve customer satisfaction in a fast-paced consumer environment.
For wholesale distributors considering their automation journey, starting with areas that promise quick wins, like automating order processing or implementing real-time inventory tracking, can yield immediate benefits. These initial steps can pave the way for more extensive digital transformation that further improves productivity and operational resilience in volatile markets. With Fortude’s expertise in implementing automation solutions including RPA, WMS, and EDIs, distributors can navigate this journey with confidence to guarantee growth that is both scalable and sustainable.
Embracing automation also offers wholesale distributors a pathway to meet today’s complex regulatory guidelines. Automated systems reduce manual processes, improve visibility, and help sync workflows across the supply chain in a holistic way to help companies meet the sustainability requirements established by standards including the ESRS and GRI.
To explore how Fortude’s tailored solutions can help your business succeed, reach out to learn how automation can support your wholesale distribution business.
FAQs
Wholesale distributors face challenges like labor shortages, rising operational costs, and increasing regulatory standards, particularly around sustainability. The growth of e-commerce and direct-to-consumer (D2C) sales also puts pressure on distributors to adapt their logistics and inventory systems for smaller, more frequent orders, making efficient operations essential.
Automation reduces the need for manual processes by handling repetitive tasks like order processing, data entry, and inventory tracking. By doing so, distributors can streamline operations, reduce labor reliance, and cut costs, ultimately enhancing productivity. Automated systems can also adapt to demand fluctuations, allowing distributors to efficiently manage peak periods without added labor expenses.
Electronic Data Interchange (EDI) automates key processes in order fulfillment and inventory tracking, reducing errors by eliminating manual data entry. This streamlines communication between distributors and suppliers, ensuring order accuracy, real-time updates, and efficient stock management, ultimately enhancing the accuracy and reliability of operations.
A WMS provides real-time tracking for inventory across stages like receiving, picking, and shipping, which enhances accuracy and reduces discrepancies. By integrating with ERP systems, WMS ensures data consistency, scalability, and efficient resource management, enabling distributors to better manage high order volumes, improve customer satisfaction, and reduce operational costs.
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