B2B Reimagined #24 | Wholesale Distribution Trends with SAP's Susanne Adam
Wholesale distribution is changing before our eyes, forcing the average distributor to reimagine its role in the global supply chain. It’s no longer enough to simply supply products at a good price to customers far and wide. The following four major trends are upping the ante:
-Increasing competition and new disruptors
-Global dynamics impacting supply chains
-Social changes resulting in a talent crunch
-Regulatory requirements adding complexity
“On the one hand, we see that suppliers sell directly to the customers of wholesale distributors, and on the other side we have B2B marketplaces with their endless assortment which means more price transparency,” said Susanne Adam, principal solution manager with the SAP wholesale distribution industry business unit. “Distributors are also the first responders in the supply chain. What happened in the beginning of the pandemic, when manufacturers slowed their production, distributors were really forced to monitor and react quickly to that sourcing risk.”
Adam joined Zilliant Chief Marketing Officer Lindsay Duran for the latest episode of B2B Reimagined to dive deeper into these trends and highlight the new opportunities they present. In a time of flux, leaders will continue to emerge who step up to the challenge by evolving into the solutions business.
Distributors own a wealth of customer and product information, as well as in-house knowledge that can be activated into a full-services solution capability. The distributor of the future will wrap services such as consulting, training, and installation around their product offerings as a standard practice. Leading with a bundled product and services offering is quickly becoming the norm, and importantly, the expectation, of end customers.
One example that Adam highlights in the episode is that of a German food wholesaler. Whereas in the past they may sell products to gas stations and convenience stores and move on, now they are driving a total turnkey solution for that customer. The wholesaler will install a small bakery that includes staff training, baking ingredients, an oven, and other supplies, promotional materials, maintenance, and delivery replenishment.
As Duran notes, that kind of total solution requires companies to think much differently about pricing than they did previously. The traditional distributor pricing challenges still exist – hundreds of thousands of products and thousands of customers leading to millions of pricing records and an untenable amount of customer price exceptions. Managing those complexities with a pricing tool is necessary, but now distributors must also determine a dynamic and value-based pricing strategy to complement their new scope of services and solutions.
“We see the situation where there is a central pricing team, but often there are other departments that also can add certain discounts for specific products or services and pricing even happens with a sales representative negotiating directly with a customer,” said Adam. “It makes it difficult to understand where margin destroyers are.”