SOI 2015 – Speed Matters
"You Have To Be Prepared To Be Quick Today"
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Distributors need to ramp-up how fast they operate to effectively compete today.
If the Internet has had a specific effect on business-to-business buying processes, it’s the speed with which customers have come to expect that they can now get things done. Indeed, quick turnaround – not just of orders, but also answers to questions, requests for proposals and price quotes – is vital today, and distributors need to ramp-up their operational procedures to ensure they’re meeting the speed demands of their clients.
“You have to be prepared to be quick today,” says Robert Davis, president and CEO of Surge Inc., a management and business consulting company based in Chicago. “There’s no such thing anymore as, ‘I’ll get back to you in 24 hours with a quote or a response.’ No, that’s not good enough. Buyers have become accustomed to being dealt with quickly and getting answers on their own if they need them by searching on the Internet. That’s the playing field right now, and companies need to recognize that their competitors could feasibly be anybody that can respond quicker.”
Davis believes this has set up a dynamic in which many companies don’t even know who their competitors are. “Today’s buyer needs a response very quickly, and if you can’t provide it, then some other company surely will – you won’t even be able to identify who that competitor is because it’ll be another company that your client found online. They may be around the corner or in a different country, but if they provide a satisfactory answer in a quicker manner, then they could get the business that you were counting on.”
Partners in Speed
Relying on vendors heavily for faster operations is a key that many distributors insist gives them the competitive edge when bidding for business. In fact, Ty Clodfelter, owner of TCI Printing LLC (asi/341408), based in Trinity, NC, says he focuses solely on the suppliers who can shave days off any order.
“Twenty years ago, standard turnaround was two weeks,” says Clodfelter, who says he’s seen vast changes in order fulfillment in the two decades he’s been in the business. “Today, I don’t have that luxury” of waiting for an order to ship two weeks after it’s placed. Those who can turn what’s typically a week-long project into one that gets completely fulfilled in three days means he’ll choose that vendor every time. As a sole proprietor, Clodfelter says, it’s crucial that he partner with reliable industry suppliers to back him up in order to remain competitive.
And, numbers revealed in State of the Industry research show the need for suppliers and distributors to work together to quicken the pace of deliveries. Distributors report that in 2014 more than a third (36%) of their orders demanded turnaround of five days or less. The numbers were even more extreme for large distributors (those with annual revenues of more than $1 million), as they reported that 43% of their orders needed to be fulfilled in less than five days.
“I expect that this would only get quicker as time goes on,” Davis says. “Today’s buyer simply expects to get things done quickly, so they wait until the last minute and still believe that they’re going to get exactly what they want.”
While many distributors rely on their top suppliers to fulfill orders quickly today, they’re also having to find ways to quicken their own operations. For many, that’s being solved with technology.
Many larger distributors are feeling the need to alter their operations, technology and staffing to remain competitive in today’s need-it-yesterday client world. “All the customer wants” is to place the order once with reliability, says Alan Chippindale, chief business development officer for BrandAlliance (asi/145177), a Top 40 distributor based in Toronto. But that can prove challenging – and costly.
Last year Corporate Imaging Concepts, LLC (asi/168962), based in Northbrook, IL, fulfilled 60,000 online orders, up from 45,000 the year before, some turned around in as little as 24 hours. To meet that need, the company invested $1 million in boosting and improving the “online experience for customers,” says Brian Abrams, the company’s CEO, who says online orders account for 37% of the company’s yearly business. In doing so, Abrams and his crew were able to reduce the number of steps it takes to complete an order to five steps, down from 19. Ultimately, that removal of redundancies or over-reliance on procedures is key to becoming a quicker organization, experts say.
In fact, technology, more than anything, is the key to faster operations, insist distributors we talked to. At Top 40 distributor CSE (asi/155807), which is based in New Berlin, WI, technology, such as newly installed computers in shipping stations, has allowed the firm to increase a single employee’s workload from 10 to 20 items in one hour, says Tom Savio, the company’s owner and CEO.
Before the shipping computers were installed, an employee “would pick an item and give it to a packer who would throw it in a box and ship it.” But sometimes “the guy picked it wrong.”
Now computers not only list the item but show a picture of it as well, so pickers and shippers know exactly which item is supposed to go in which box.
It was a smart investment that has helped to reduce the company’s fulfillment errors by 50% and cut its production time in half. In addition, Savio says, the company created an innovative incentive program in which employees are motivated to speed up orders and increase accuracy at the same time.
Each quarter, $50,000 is set aside in a “mistake pool.” Any time an employee picks and packs incorrectly, $5 is subtracted from the pool. Incorrect orders that make it to clients result in a $10 deduction. At the end of the quarter the remaining pool is divided between the company’s 100 employees.
“It’s using money that was getting thrown out the window anyway” in redoing incorrect orders, Savio says, and has virtually eliminated what he estimates were as much as $200,000 in mistakes.
That kind of proactive motivational program is a smart way for companies to work on quickening the pace of their operations, Davis says. “You need to be creative today because clients are expecting that from you,” Davis suggests. “Get your employees involved – and compensate and motivate them accordingly – so everyone at the company is focused on speed and efficiency.”