For most businesses, competing on price is a losing proposition. Instead, the hallmarks of a profitable and well-positioned company are knowledge, selection and turnaround. From wholesale distributors, customers demand a comprehensive, reliable inventory that they can reach whenever it is convenient for them.
Their success depends on more than simply knowing costs per unit, quantities on hand and containers in transit. Sustained profitability requires mastering interconnected, many-to-many relationships and developing a deep understanding of the quality, reliability and resiliency of their trading partners and their value to their supply network.
For example, Hestra USA distributes snowsport, biking, mountaineering, work and fashion gloves manufactured by its parent company, Hestra of Sweden, so it is critical to know all attributes of its financials, inventory management, case management and incentive compensation for its sales staff, while providing the parent company’s CFO in Sweden with real-time financials on subsidiary performance.
The company used to manage its business with an on-premise software system but struggled with limited visibility into financial performance, high levels of manual processing and inefficient inventory management.
By turning to cloud technology, Hestra USA has gained visibility and control of its business, contributing to revenue growth of about 50 percent a year. It now has real-time visibility of all warehouse inventory and increased its shipping accuracy to more than 99 percent with automated pick, pack and ship workflows, handling more than 120,000 gloves a year.
Additionally, CRM has helped the Hestra USA sales team expand the number of dealer accounts from 200 to 500, while electronic data interchange (EDI) streamlines transactions with large retail customers.
From a trading partner optimization perspective, the cloud offers three distinct advantages:
1. Real-time collaboration – Moving wholesale distribution processes to the cloud makes it possible for data to flow seamlessly. Wholesale distributors and their trading partners can also communicate in lockstep with the same data, audit trails and real-time accuracy at every stage. Stakeholders can share container, pallet, location, forecasting, scheduling and unit-level data while collaborating on a common platform.
2. Single data set – Rather than data on supplier cost, speed, quality and other key metrics scattered across disparate applications or stored in spreadsheets, the cloud enables wholesale distributors to build and manage a single data set on trading partner performance. Visibility makes it easy to pinpoint margins of difference, assess trends over time and balance various metrics against each other to make informed, data-driven decisions on overall value.
3. Business and IT agility – Wholesale distributors can identify and act on opportunities to ramp up production, switch suppliers, change components or satisfy a special customer order. From an IT perspective, customizing processes or incorporating new functionality, such as with a prebuilt application from a software vendor partnered with one's own cloud provider, can be faster and less costly than with on-premise solutions. This enables resources to be channelled into building the business, not managing IT.
Trading partner optimization is critical to having the information needed to align business operations with strategic goals, something that is top of mind for many wholesale distributors. At the end of the day, trading partners rely on this critical supply chain channel to deliver flexibility, consistency of service, fast response to customer needs and a local presence.
Ranga Bodla is senior director of industry marketing for Netsuite (www.netsuite.com).
