The State Of Innovation 2023: Distributor Benchmarking
Over the spring and summer of 2023, PPAI Media asked industry distributors of all sizes a series of questions to assess their status on a number of technological fronts.
The following survey questions, which were also used to score the inaugural PPAI 100's Innovation category, reveal how distributors at multiple competitive bands in the marketplace compare to one another.
Distributors: How does your firm stack up to the competition, and are there areas you can improve or update?
“Based on this data, there appears to be a strong opportunity for small distributors to leverage tools such as SAGE’s live inventory, which is included with PPAI membership,” says Ryan Feigenblatt, MAS, founder and president of The Boca Ratonian, based in Florida.
“Distributors of all sizes should consistently and persistently request their supplier partners integrate with SAGE and PDX,” adds Feigenblatt, a member of PPAI’s 2023 Technology Committee.
Distributors using SAGE are able to view real-time order status and inventory from suppliers integrating through PDX.
Although cybersecurity should be a top priority for every company, Malik Hemani, CAS, principal and creative director at Houston-based Graphic Stylus, finds these results to be suspect, particularly for distributors making $50 million and under.
“I assume small and mid-size distributors are reviewing security vulnerability reports more on the annual side rather than weekly or monthly because they probably don’t have dedicated staff on the technology side doing that,” says Hemani, a member of PPAI’s 2023 Technology Committee.
Overall, more suppliers are offering live chat than distributors are. That’s puzzling considering that distributors interact with consumers, who expect on-demand attention from brands they’re interested in doing business with. For example, 59% of customers are more likely to buy when brands answer their queries in under a minute, according to Ifbyphone research.
Implementing a live chat support system allows customers to receive immediate assistance, personalized guidance and real-time support whenever they need it.
Although an ERP system may have been installed 10 years ago, that doesn’t mean the software hasn’t been upgraded with patches, fixes and new features over time. Regardless, industry leaders anticipate newer installations of ERP systems to increase across all distributor categories as technological advances make it more affordable and accessible.
Some distributors with under $1 million in revenue reported that they use SAGE, which updates on a regular basis.
Kurt Tempelmeyer, national operations director at West Palm Beach, Florida-based Fully Promoted – ranked the No. 18 distributor in this year’s PPAI 100 – is surprised that more top distributors concurred that time (40%) acts as a more significant impediment compared to financial constraints (23%) or limitations of systems (23%).
“This revelation is particularly intriguing, indicating that substantial financial resources don’t necessarily provide the advantage one might anticipate,” Tempelmeyer says. “Instead, agility and ingenuity will likely win out. Less is more.”
“Hopefully, suppliers are paying close attention to this metric,” Feigenblatt says, “as lack of integrated inventory and order status not only creates friction but also decreases search results visibility and potential sales.”
Tempelmeyer breaks it down like this: Achieving the status of a $1 million sales representative hinges on generating $500 per hour.
“This objective becomes challenging when tied up on the phone with an inadequately staffed customer service department, struggling to verify inventory availability,” Tempelmeyer says. “While your salesmanship might be on par, your potential remains constrained due to ineffective operational procedures. To come out on top, a transformation is imperative, requiring an overhaul not only of our technology systems, but also our operational workflow.”
“In today’s market, with sales reps and CSR reps all over the U.S., I expect more of the top distributors to have a cloud-based infrastructure rather than in-house or sitting in a local data center,” Hemani says.
It makes sense for less than half of distributors with under $1 million in revenue to have 100% cloud-based infrastructure considering that 42% cited money and resources as the biggest obstacle hindering their integration process (see Table 16).
Feigenblatt is hopeful that distributors who still prefer emailing and calling soon realize the powerful benefits of live inventory at their fingertips.
“Oftentimes, the supplier is retrieving inventory levels from the same data source that is pushed to the web,” Feigenblatt says, “so why not help reduce the added busywork on both sides? Distributors and suppliers alike have much to gain in productivity and profitability by shifting our time to tasks and projects that will yield maximum impact. Reduced friction and increased efficiency is a win-win for all.”
Common answers in the “other” category were Skype, Google Workspace and Google Chat, which come as no surprise to Hemani. “A lot of the emails we send out to Google,” he says. “We definitely need to pay attention to the lack of security there is on Google Workspace and Google Business Suite.”