Quick Take: Distribution’s bold new role

Can distributors lead the way to a brighter future for the supply chain?

Distributors can lead

In a few weeks, I am presenting distribution’s bold and bright vision for the supply chain at CSCMP EDGE 2022, the Council of Supply Chain Management’s annual industry conference. I’ve written several newsletters to help shape and sharpen my remarks. But in this edition, I attempt something different: Rather than presenting ideas for the future, I offer distributors as the indispensable partner for getting there.

In my quest to reintroduce distributors to supply chain professionals, I found critical facts and analysis in The Gartner Supply Chain Top 25 for 2022 Insights On Leaders report, mainly as discussed by Mike Griswold on a recent Gartner podcast episode. Griswold explores four macro trends reshaping the supply chain. Below, I briefly explore each movement and introduce emerging supply chain concepts championed by distributors.

Supply chains must become self-stabilizing and deal with disruption

Perhaps distribution’s first and most crucial advice for leading the supply chain forward is to be optimistic, outward thinking, and not defensive. As intermediaries between suppliers and customers, distributor business models are fragile, fraught with friction, and ripe for disruption. But as discovered by distributors, the best defense is an excellent offense.

Mindsets matter, and distributors are building new cultures and capabilities. Upgrading customer experience (CX) methodologies, distributors are designing an innovation frame that goes beyond how customers interact with brands to step up and improve customer outcomes (CO). CO is a hyper-commitment to helping customers innovate in their business, replacing efficiency as a singular, all-consuming North Star.

Distributors are pursuing customer outcomes by becoming an innovation intermediary—a role defined as “any organization that acts as an agent or broker in any aspect of the innovation process between two or more parties.” By doing so, distributors coordinate and deploy the supply chain’s vast resources, drawing on the knowledge and capabilities of manufacturers, transporters, artificial intelligence experts, educators, system integrators, and more.

Supply chains are making progress toward sustainability

Griswold names four sustainability focus areas: scope three emissions; regenerative agriculture; the circular economy; and organizational change around diversity, equity, and inclusion (DEI.) He offers examples, including competitors coming together to develop reusable cups, the emergence of multiple-use cardboard boxes, and eliminating plastic bags from use at the point of sale. These are all powerful ideas, but distributors have a different approach—distribution’s business models may be reinvented as a force for continuous regeneration.

Distributors have noticed that sustainability is redefined beyond “doing less harm” to “doing more good.” This is a positive development because it opens the door to collaboration with community leaders. Building on a long tradition as practical businesspeople, distributors meet with local leaders to understand development goals, foster communication, and coordinate resources across multiple lines of trade. In one promising concept, distributors may join the fight for decarbonization and renewable energy by becoming community-based intermediaries distributing electrical power through batteries and data-driven smart power management practices.

Digital transformation requires human-centric automation

Griswold notes the power of data and digital technologies to provide exponential gains, often deployed as a disruptive force within supply chain companies’ organizations and their customers’:

We also know that the disruptions that we're dealing with are really forcing us to look into some other areas as well. Eighty-eight percent are looking at investing in advanced analytics; 84% robotic process automation; 76% in digital twins. All of this is geared toward not replacing people, but potentially augmenting people with machines so we make better decisions faster.

Again, distributors have a different idea—technology should be in the service of human needs, deployed to enable human flourishing. Doing so avoids the temptation to deploy technology as a best practice instead of first seeking better human outcomes. 

Rabbi Irwin Kula, president of the Center for Learning and Leadership, offers excellent advice on human flourishing. I explore his ideas here, including training leaders and teams to act on curiosity as they push for profits, building supply chain networks at a scale to sustain human (not virtual) relationships, and reimagining customer interactions as a way to create space for conversations—discussions that allow the supply chain ecosystem to offer its assets for solutions to any problem, anywhere.

Supply chain leaders must navigate and orchestrate across an ecosystem

Griswold is optimistic about the power of the supply chain to solve problems and notes, “If you look at our Top 25 companies, many of them will describe their supply chain as a competitive weapon, as a strategic differentiator, a mechanism that will drive innovation and support innovation.” These are strong words, evidenced by the progress detailed in Gartner’s Top 25 report.

Working with distributors, I have learned that every great idea requires an equally profound method. I discovered a powerful approach in an MIT Sloan Management Review article, The Future of Team Leadership Is Multimodal. Writing here, I apply the author’s guidance to lead the supply chain to reinvent itself by organizing hybrid work teams:

• The most consequential B2B innovations result not from teams working within a company but from teams with members collaborating across companies;

• The future of global and local supply chains can only arise from teams working in face-to-face meetings. Virtual meetings are necessary but can only monitor progress, not create it;

• Innovating the supply chain requires a moonshot, meaning it can only be accomplished when supply chain companies come together to share resources, investments, and risks.

Your take?

Distributors are digitally transforming and buttressing their business models against the forces of disruption. Still, distributors' opportunity to help build a resilient, responsive, and regenerative supply chain lies in the future, not the present. Distributors must be heard, and collaboration is mandatory.

Do you see distributors' role in leading the supply chain to its future? What are you doing? How can I help? Please share your comments below or reach me at mark.dancer@n4bi.com.