Optimizing Small Distributors

Overview and Need

Today small distributors are facing unprecedented difficulties in technology, human resources and investment. Technology continues to change at a rapid pace, becoming less costly, and spurring innovation in operational efficiency as well as sales and marketing at distribution firms of all sizes. Best practices in process, human, and information capital development have demonstrated their importance in revenue management, improving customer relationships, enhancing the sales process, and reducing cost and risks. The demands of multi-generational buyers and new purchasing behaviors are pushing distributors to adjust internal structures and sales processes. Furthermore, consolidation is accelerating at both the supplier and distributor levels. Such consolidation may lead to realignment of the channel and territorial conflicts, challenging small distributors to remain competitive.

According to a Federal Reserve forecast, economic growth will remain in the 2% range over the long run. It is therefore imperative for small distributors to recognize both the challenges and opportunities in order to improve business processes, leverage new technologies, and effectively manage assets, revenue and expenses. Unfortunately, much of distribution research that has been marketed as beneficial for “distributors” has often been produced with only “large distributors” in mind. In a number of areas small distributors do not enjoy the same economies of scale large distributors do; it follows that it is unlikely that what is optimal for large distributors is also optimal for small ones. Thus, it behooves small distributors to invest in affordable research that is customized to their circumstances.