Distributor Differentiation through Value Added Services – Part 2

12/18/2017

Guest Blogger, Dr. Bill McCleave, PE

You’ll recall from Part 1 in this two-part blog series, I began sharing insights from the book I partnered with Tom Gale, editor of Modern Distribution Management magazine to write entitled Standout from the Competition . Through extensive primary research, our book examined how distributors across North America differentiated their firms in various market environments.
Three of the four ways that smaller companies can gain a competitive advantage—Financial, Talent and Technique—were covered Part 1. Now I’ll cover the fourthDistributor Differentiation through Value Added Services – Part 2 

4. Technology: A competitive advantage may be achieved in two ways with regard to technology.  First, by selling advanced technology products to create customer appeal and drive customer satisfaction. Second, by fully utilizing all appropriate technologies to position smaller firms to perform activities faster and more efficiently and to give customers the look and feel of a larger firm.
Advanced Information and communications technologies have allowed many distributor firms to do the seemingly impossible: enhance their traditional offerings and market reach while simultaneously containing costs and increasing profits. The uses and benefits of technologies within distribution firms are almost unlimited – from management dashboards to advanced analytics, technology is changing traditional distribution. Distributors can couple value-added services with advanced technology to offer unique customer experiences that give them an edge over the competition. For example, distributors that implement eCommerce or alternative online selling methods may want to leverage technology tools to gather customer feedback and provide additional product recommendations based upon purchasing behavior, as well as dive into demographic and market segmentation. Further, distributors can use these tools to create online catalogs and order tracking. 
Of course, these are only a few examples of how competitive advantage is gained by leveraging technology.  There are dozens of effective strategies to consider. Here are just a few more examples:

  • Effective document management systems can save you a significant amount of time and streamline your workflow while having a direct impact on your customer satisfaction.
  • Expert systems and the use of artificial intelligence techniques enable you to better anticipate and respond to customer orders, actions, and unique needs.
  • Labor tracking tools can help you improve efficiency and productivity by tracking the time workers spend on selected jobs and orders.
  • Lean process – which is much more complex than what could be covered here – is an organizational commitment to creating key processes focused on entirely on driving customer value.
  • eCommerce – already mentioned above – is no longer an option for distributors of any size.  If you want to compete, you need to offer your customers the convenience and flexibility they have come to expect from their own online habits as consumers.
  • Order staging and tracking through your business system allows you to execute orders quickly and repeatedly for key clients, and ensure on-time delivery with less risk of mistakes.
  • Production assembly and light manufacturing continues to be an essential differentiating service – and one that your competitors are likely offering.
  • Better technology for service and maintenance management can drastically improve your customers’ experiences and satisfaction.

In summary, meaningful differentiation not only creates competitive advantages, but it forms the basis for survival. Successful strategies are often about tradeoffs. When you look at the universe of what you have, where you do business, and who you do business with (i.e., products, services, markets, customers, suppliers, activities, capabilities), you need to ask: What do you emphasize? What do you de-emphasize? How do you leverage both your own experience and resources from others you work with?

At day’s end, a balancing act is needed between products, services attached to those products, and optional services you provide to add value beyond what competitors are doing. Determining this balance is key to successful differentiation.

Dr. William R. McCleave, Jr. P.E. is a nationally recognized speaker, trainer and president of W. R. McCleave & Associates, a consulting firm specializing in relationship management for industrial distributors, manufacturers and their customers. He is also a leading expert on Integrated Supply. He has over 30 years of industry experience in executive managerial roles and has served as an advisor and trainer to a wide variety of distributor and industrial clients.

 

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