Top 5 Reasons to Initiate Digital Transformation in the Distribution Industry
Infor | 4 min READ
    
Owing to the restrictions implied by governments worldwide, the distribution industry had to face hurdles the size of mountains. Had this industry not adapted to the never-before-seen situation, the world would have come to a total standstill. However, as lockdowns were lifted across the globe and industries were preparing to take over markets, they were faced with challenges that would require them to intensify their foray into the adoption of digital processes. Several reasons call for the immediate initiation of digital transformation. Let us discuss 5 of the most crucial challenges the distribution industry faces.
Sanjay Mutalik
Sanjay Mutalik

Associate Practice Director

Infor

Birlasoft

 
However, as lockdowns were lifted across the globe and industries were preparing to take over markets, they were faced with challenges that would require them to intensify their foray into the adoption of digital processes. Several reasons call for the immediate initiation of digital transformation. Let us discuss 5 of the most crucial challenges the distribution industry faces.
1. Management of talent and inventory: It is important to replace repetitive and redundant manual processes that require employees to carry out repetitive tasks, which the adoption of new technologies can carry out. The talent being wasted upon repetitive and redundant processes can be utilized to enhance other aspects of business that add to the financial and strategic growth of the company. This allows companies to cut costs and streamline processes. Integrating several processes over an ERP ensures that real-time data is available to the employees to make better decisions. This, in turn, ensures that the production can take place seamlessly. Successful integration of an effective ERP would also improve supply chain management.
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2. To enhance Resilience: The distribution industry is no stranger to disruption. The worldwide disruption being the most major one in recent times, has opened eyes and exposed the vulnerabilities of conventional processes. Digital transformation is necessary to ensure that this industry stands the test of time and challenges. Supplier management is one of the most crucial tasks that need diversification and better integration with business partners. In addition, the distributors must adopt new technologies to ensure better demand-driven material requirements planning and optimize industry buffers.
3. Need to develop overall Business Intelligence: It is also important that Business Intelligence or BI be achieved by receiving real-time sales and requirement data. Digital transformation in the Distribution Industry would allow companies to maintain better inventories and increase profits. It is also important that the production line of these Distribution companies be enhanced. The application of IoT can imply better monitoring processes of components that contribute to workshop processes. It would allow employees to avoid breakdowns and enhance service quality. An effective combination of IoT and monitoring platforms can help employees identify vulnerabilities in production lines, allowing companies to enable seamless production processes when addressed.
4. Need to enhance customer experience: As soon as the lockdowns were lifted, a sharp rise in the market value of e-commerce was observed because of the changed preferences of customers. The share of online retail jumped from 16% to 19% of the total retail sales. This took place because of the travel restrictions. However, customers have identified several benefits of online shopping. Customers intend to choose and buy from greater varieties of products and prefer shipping it according to their preferences. This puts extra stress upon the market players in the distribution industry. To overcome the challenges faced by these distribution companies, logistics companies are resorting to logistics optimization software. A logistics optimization software specializes in the creation of optimal transportation plans which satisfy constraints set by the customer. These constraints include delivery times and forbidden routes. Thus, distribution companies can ensure timely and quality services to customers.
5. Enhancing visibility: To ensure better business execution, distribution companies need to ensure that employees working on different levels of the supply chain have access to information regarding raw materials and demand information. Digital transformation by adopting technologies that can track the movement of goods and materials can help companies identify the production capacity and other constraints of the production line. This, in turn, allows the distribution company to plan its business processes ahead of time. In addition, seamless production and movement of products in the supply chain can help companies provide seamless services. Companies can adopt sensors, Global Positioning Systems, and Radio Frequency Identification Systems technologies to enhance this aspect.
Digital transformations can help companies turn challenges into opportunities and opportunities into results. Adopting an appropriate ERP is one of the best steps that a mid to large-sized company can take to facilitate digital transformation within the company. An ERP, or Enterprise Resource Plan, is a platform that connects different domains of a business, such as production and sales. For example, with the successful integration of an ERP, the production department can access data regarding sales and future sales predictions, which will allow them to maintain an appropriate inventory, and meet demands.
 Top 5 Reasons to Initiate Digital Transformation in the Distribution Industry
Through rigorous and thorough studies, it has been observed that adopting advanced technologies in firms leads to enhanced productivity, leading to higher revenues. Moreover, digital transformation affects other domains, such as talent management. Technological advancements are necessary for companies to keep up with their competition. Therefore, existing processes must implement advanced technologies to enhance them. It has been observed that digital transformations can help organizations improve their productivity by 40% and enhance the quality of new products by more than 23%.
Upon careful consideration of the contribution of digital transformation towards the growth of organizations, it has been predicted that digitally transformed companies are poised to contribute more than half of the global GDP by 2023, which would account for almost $53.3 Trillion. Thus, the distribution industry can achieve its untapped potential upon a successful digital transformation, which makes a strong case for itself!
 
 
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