Unusual Times Call for Changing Strategies

In 2020 most companies had no experience on what to do during a pandemic,  so most followed traditional responses to tough times:

• Cut back,
• Slash costs and
• “Hunker down” until the crisis passes.

“In these unusual times, why are some companies trying to do things the old way? “

In the hospitality and travel industries, those were probably the most prudent strategies. however, the hospitality companies that paired cutbacks with increases in cleaning protocols and creative marketing faired better than those that did not. 

As the economic impacts linger into 2021 and other companies change strategies, traditional responses may not be enough to thrive in the “new normal.”  As we review advice from our enterprise level customers, software partners and industry experts, some strategies we see include:

• Onshoring of component manufacturing or suppliers is a noble concept, used by larger companies but not practical for smaller businesses without significant clout in the marketplace.  However, some of our customers have bought  new or additional machinery to do more kitting or finishing of component parts to create new or additional finished goods.
• Many logistics professionals can choose suppliers, but do not have control over their vendor supply chain.   Finding secondary and tertiary suppliers is often impractical or not even possible for smaller companies.

Practical Advice for Quick Implementation

Our customers are looking for practical advice that can be implemented in 1-3 months max!  Some creative companies are taking what seem to be “counterintuitive” strategies and finding success in what otherwise might be a down market.   In the distribution market we are seeing:

• Increasing your product diversity
  • Become the one stop shop for customers in your target market.  You can’t be Amazon, but by communicating with your customers and learning what else you can supply them, you can win a bigger part of their business and grow.
• Upgrade your systems to do more with less
  • Spending money on business management is often deemed as a cost to be minimized; however, new systems can save money!  Companies are learning that new systems with improved collaboration tools, faster access to customer information and a single version of the truth can generate a positive return on investment and allow your company to scale without increasing staff.
  • Adding a basic bar code scanning system to your existing business management software can also improve accuracy in pick, pack and put-away increasing operational efficiency and customer satisfaction.
• Create new partnerships
  • Partnering with a company that sells complimentary products to create new bundles is a traditional strategy, but new creative partnering is taking hold in the hardest hit industries and may be a great opportunity.  Selling through e-Bay may have been a traditional way to move obsolete inventory, but there are other marketplaces popping up and the evil empires (aka. Amazon, Wayfair, etc.) may just prove to be a friend if they open your doors to a new market. 
• Incorporate cloud services
  • Cloud services does not necessarily mean moving all your systems to a cloud service provider.   Integrations with webstores, shipping services, or tax services can often provide better service at lower cost than manual systems.  Adding simple services like:
    • “Click to pay” on your invoice can make your customer’s life easier and promote faster collection of receivables.
    • Suppliers like ShipStation (Acutane) can often get you lower rates on parcel service than those negotiated discounts you worked so hard to get!
    • SAP’s tax service or commercial providers like Avalara not only keep your rates up to date, but provide assurance that your sales tax audit will go smooth and filing can be outsourced.
    • If you need more than the built in Materials Requirements Planning (MRP) offered by the core Enterprise Resource Planning (ERP) system, inventory optimization tools like Netstock or Valogix can greatly improve efficiency in complex distribution scenarios.
  • Alternatively a new cloud based business management system can accelerate your adoption of industry best practices in a time when operational improvement is critical.  An ERP system integrates the business, providing a single version of the truth to the entire organization in real time.  When used properly ERP is a massive communication tool for your business.

For more information on how we can help you thrive in 2021 contact one of our distribution experts at 678-401-6244 or at Sales@sapdistribution.com.