Interesting article. Agree with some of it and am hopeful and optimistic about industry collaboration towards the better tomorrow. Maybe a test project or two, like helping Ukrainians, could be a uniting point. Our small company already raises over six figures annually for charity in partnership with our vendors. Outside of these important altruistic goals, the business challenge for distribution imo is that we have size disparity, mostly small companies like us, but also some billion dollar ones who can act more like Tesla than we can. The majority of us are just trying to hang in there and address day to day challenges that threaten our businesses. There's not a lot of extra bandwidth to both keep the boat afloat and make speed. Whether it's supply chain disruption causing us to have nothing to sell, the threat of large commodity price swings, a ransomware attack, a key vendor who drops us, a massive customer who shoves off, an hourly employee crisis, or any number of other threats, we have our hands full with tactical matters. Data we need. The product dimensional information you mention should not be a discussion, should just be a given. But share our sales data with everyone else? That is a risk we aren't ready to take yet. The behemoths have departments of MBAs we don't have. Why give them a road map to the cheddar? But, as an optimist like you, I dream about a more advanced world for distribution. Compared to retail we are way behind. Expensive labor sits idle at our customers while we spend exorbitant resources just trying to find out where our and their backorders are. In contrast, personally we are getting automatic step by step updates on the status of the garden supplies we ordered for the weekend project, a project we may or may not get around to. Perhaps those making and sourcing items that we deliver should invest more into systems and standards that pass data to distributors so we can help customers finish their projects, many projects that are critical, projects that will fight diseases like Cancer, and projects that will help those in need like Ukrainians. I get it that vendors make their money by locking down specifications and not by enhancing supply chain data, but we independent distributors can't really get past tactical emergencies without gaining data on material flow at this point. This is a major distraction from getting into Utopian mode. Again, we aspire to get there, but a lot of friction on the flywheel makes that mostly an afterthought today. While not as awe inspiring, achieving the foundation of exchanging basic transactional data is still the priority. We have to crawl before we walk, and walk before we run. But yes, we can and will run some day. We must.
Thank you for your comments. There's a lot to unpack. I noticed that you said this: "The majority of us are just trying to hang in there and address day to day challenges that threaten our businesses. There's not a lot of extra bandwidth to both keep the boat afloat and make speed."
I'm looking for partners to help the many distributors that are small and mid-sized companies. One idea is to create a community of small enterprise innovators. Or perhaps associations and buying groups can step up in a new way. Or maybe some digital startup can offer a new tech solution, something that automates work, cleans up and analyzes data, etc. I understand the need to protect proprietary data as distributors collaborate with suppliers. On that front, maybe a third party data platform, etc.
All of this is about removing friction because friction attracts disruptors. I'm hoping we can find a way forward before someone from the outside sees disruptive opportunities and beats us to the punch. It's about momentum - it's hard to start, but once started, keep moving forward.
Thanks Mark, my opinion on disruptors are that they will go where the easy money is first, which are small parcel friendly products. That's why we have been moving away from reliance on those. Luckily many of our vendors are holding out on selling through alternative channels to protect their distribution, but we can't/shouldn't count on their generosity. I am at a loss as to what we can bring them to stop them if the end users are happy with the disruptor ease of access and value. The Grainger book was the first disruptor I remember, and customers loved it. It took a decade but we lost that margin friendly business. Then it was DIY. I think that we need a defense that is strong, like a valued franchise that only sells through us. Yes, the marketing groups have worked. What else will help stave them off? Idk. Luckily for us we are in a world of smaller customers where we can build strong B2B relationships. And, we can usually move those customers with us regardless of product. We also have custom heavy logistics that would be, for now, too much of a challenge for the disruptors. Part of the challenge is that we have a disproportionate amount of lifestyle companies who are putting food on the table and not too worried about the future and are somewhat anti-change. Interested in learning more about your idea but can't understand the value proposition at this point.
Interesting article. Agree with some of it and am hopeful and optimistic about industry collaboration towards the better tomorrow. Maybe a test project or two, like helping Ukrainians, could be a uniting point. Our small company already raises over six figures annually for charity in partnership with our vendors. Outside of these important altruistic goals, the business challenge for distribution imo is that we have size disparity, mostly small companies like us, but also some billion dollar ones who can act more like Tesla than we can. The majority of us are just trying to hang in there and address day to day challenges that threaten our businesses. There's not a lot of extra bandwidth to both keep the boat afloat and make speed. Whether it's supply chain disruption causing us to have nothing to sell, the threat of large commodity price swings, a ransomware attack, a key vendor who drops us, a massive customer who shoves off, an hourly employee crisis, or any number of other threats, we have our hands full with tactical matters. Data we need. The product dimensional information you mention should not be a discussion, should just be a given. But share our sales data with everyone else? That is a risk we aren't ready to take yet. The behemoths have departments of MBAs we don't have. Why give them a road map to the cheddar? But, as an optimist like you, I dream about a more advanced world for distribution. Compared to retail we are way behind. Expensive labor sits idle at our customers while we spend exorbitant resources just trying to find out where our and their backorders are. In contrast, personally we are getting automatic step by step updates on the status of the garden supplies we ordered for the weekend project, a project we may or may not get around to. Perhaps those making and sourcing items that we deliver should invest more into systems and standards that pass data to distributors so we can help customers finish their projects, many projects that are critical, projects that will fight diseases like Cancer, and projects that will help those in need like Ukrainians. I get it that vendors make their money by locking down specifications and not by enhancing supply chain data, but we independent distributors can't really get past tactical emergencies without gaining data on material flow at this point. This is a major distraction from getting into Utopian mode. Again, we aspire to get there, but a lot of friction on the flywheel makes that mostly an afterthought today. While not as awe inspiring, achieving the foundation of exchanging basic transactional data is still the priority. We have to crawl before we walk, and walk before we run. But yes, we can and will run some day. We must.
Steve,
Thank you for your comments. There's a lot to unpack. I noticed that you said this: "The majority of us are just trying to hang in there and address day to day challenges that threaten our businesses. There's not a lot of extra bandwidth to both keep the boat afloat and make speed."
I'm looking for partners to help the many distributors that are small and mid-sized companies. One idea is to create a community of small enterprise innovators. Or perhaps associations and buying groups can step up in a new way. Or maybe some digital startup can offer a new tech solution, something that automates work, cleans up and analyzes data, etc. I understand the need to protect proprietary data as distributors collaborate with suppliers. On that front, maybe a third party data platform, etc.
All of this is about removing friction because friction attracts disruptors. I'm hoping we can find a way forward before someone from the outside sees disruptive opportunities and beats us to the punch. It's about momentum - it's hard to start, but once started, keep moving forward.
Mark
Thanks Mark, my opinion on disruptors are that they will go where the easy money is first, which are small parcel friendly products. That's why we have been moving away from reliance on those. Luckily many of our vendors are holding out on selling through alternative channels to protect their distribution, but we can't/shouldn't count on their generosity. I am at a loss as to what we can bring them to stop them if the end users are happy with the disruptor ease of access and value. The Grainger book was the first disruptor I remember, and customers loved it. It took a decade but we lost that margin friendly business. Then it was DIY. I think that we need a defense that is strong, like a valued franchise that only sells through us. Yes, the marketing groups have worked. What else will help stave them off? Idk. Luckily for us we are in a world of smaller customers where we can build strong B2B relationships. And, we can usually move those customers with us regardless of product. We also have custom heavy logistics that would be, for now, too much of a challenge for the disruptors. Part of the challenge is that we have a disproportionate amount of lifestyle companies who are putting food on the table and not too worried about the future and are somewhat anti-change. Interested in learning more about your idea but can't understand the value proposition at this point.