Why Some Distributors Thrive Even When Supply Chains Are Challenging

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Distributors are changing their operations in order to meet customer needs and remain profitable as supply chain challenges delay deliveries. They can more easily make the right adjustments when they use the best possible data intelligence to fuel their decisions and develop different ways of engaging with vendors and trading partners. We will consider data insight and vendor management in upcoming articles. Today, we consider the remarkable successes of Sikich distributor clients during these unusual times for the supply chain.

A tidal wave of supply chain troubles

On November 14, the CBS news show 60 Minutes dedicated its entire broadcast to supply chain issues. Focusing on supply chain disruptions at the ports of Long Beach and Los Angeles as well as the Chicago railyards, correspondent Bill Whitaker spoke to several business executives, the captain of a container ship, and the head of a trucking organization. Viewers learned about the complex supply chain dependencies and bottlenecks these managers and their companies struggle with. They would have come away with the impression that there’s no real, near-term resolution in sight. They would likely expect that the holiday season will be disappointing for many consumers and that it could be ruinous for businesses which can’t deliver to them.

There’s no doubt that the current supply chain issues are some of the most consequential problems many businesses have ever faced. However, we also see that companies meet these challenges head-on and create outstanding results by doing so.

One of the executives interviewed on 60 Minutes was Rick Woldenberg, the CEO and Chairman of Learning Resources, a company that distributes educational toys. Woldenberg described extremely long shipping lead times from his vendors and skyrocketing container shipping fees topped by penalties imposed by a rail transporter.

It’s painful to hear what Learning Resources is dealing with, but we are confident that the company will weather this current storm and set a great example for many others. Sikich has watched Learning Resources create a dramatic turnaround before. When the pandemic threatened to disrupt customer demand, the company quickly revised its product portfolio and distribution methods. The result was that Learning Resources doubled its business volume during 2020.

A methodology for powering transformations

Like Learning Resources, Sikich clients share a view of technology as a transformative enabler. Some of them already digitized their distribution processes and developed data-driven management before the pandemic and current supply chain problems could have an impact. Others are rapidly rebuilding on digital platforms to gain greater agility and insight into their operations, markets, and industries.

Many distribution-focused companies and distributing manufacturers Sikich works with rely on Microsoft Dynamics 365 as their cloud business management platform. For them, we deploy Dynamics 365, configure it to suit their operations, and integrate it with their other business systems or Microsoft solutions on the Azure cloud. Often, they aim to gain advanced insight and improved decision-making capabilities by enhancing Dynamics 365 with Power BI and other analytics solutions created by Microsoft. When we implement Dynamics 365 for a distributor, we use the Sikich HeadSTART methodology, which makes it possible to achieve the right business outcomes from extremely efficient and smooth deployment projects. HeadSTART also gives clients an opportunity to reconsider their processes and avoid translating existing complications and inefficiencies into a different technology environment. The Dynamics 365 model in HeadSTART includes a large number of preconfigured distribution processes based on our expertise from hundreds of projects and the industry’s leading best practices. For some distribution clients, just that change from overly complex, vulnerable processes to optimizing them on a best-practice standard already resolves vexing productivity bottlenecks in their business.

When Microsoft prepares to roll out new solutions for the Dynamics 365 platform, like Intelligent Order Management and Supply Chain Insights, Sikich technologists use their early insight into Microsoft innovation to incorporate them into HeadSTART and make them available within our proven delivery model. For distributors, we have also incorporated into HeadSTART several third-party solutions to address specific, common concerns.

Succeeding against all odds

On a scalable, versatile Dynamics 365 ERP foundation delivered through HeadSTART, distributors we know have achieved a new level of agility, enabling them to adjust promptly as the business climate changes. Here are some examples of what Sikich distribution clients using Dynamics 365 are accomplishing to overcome supply chain and pandemic challenges:

  • Some businesses stand up additional distribution and storage facilities that are closer to their customers. That means not just budgeting and working with various vendors to get the physical locations ready but also recruiting and onboarding additional team members.
  • Distributors redesign their workforces to deliver the best possible customer service and keep the business going and growing. They create new roles and teams, bring on fresh talent, add shifts, and give workers anytime, anywhere access to Dynamics 365 capabilities and business data through the cloud.
  • Several companies launch new services and different products—think testing and vaccination tents, face masks, hand sanitizer, or home-office furniture—to satisfy shifting demand.
  • Realizing that they could do better for their customers by connecting with them directly, a number of distributors create new eCommerce channels for certain high-demand products. Managing these venues within Dynamics 365, they can more reliably deliver an excellent customer experience and maintain healthier margins.
  • For many clients, it is a high priority to qualify alternate vendors, source their supplies from regional providers, and thereby minimize shipping lead times and costs. With Sikich’s assistance, many of these distributors offer trading partners and customers self-service portals, where they can submit invoices, make payments, provide or receive shipping updates, review process and product documentation, and more. EDI communications with vendors speed up interactions and avoid the busy work and errors typical for manual data entry.
  • Inventory management with Dynamics 365 has become an even more business-critical discipline for distributors than it was pre-pandemic. Some businesses commit to maintaining minimum inventory levels for certain customers. Our clients also tend to keep more inventory on hand, replenish earlier, distribute inventory across warehouse locations to be closer to customers, and rely on their software tools to gain earlier and more accurate visibility of inventory status and projected movements.

Here to help

If you are interested in using transformative technology to improve and grow your distribution business, Sikich is ready to work with you.

This publication contains general information only and Sikich is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or any other professional advice or services. This publication is not a substitute for such professional advice or services, nor should you use it as a basis for any decision, action or omission that may affect you or your business. Before making any decision, taking any action or omitting an action that may affect you or your business, you should consult a qualified professional advisor. You acknowledge that Sikich shall not be responsible for any loss sustained by you or any person who relies on this publication.

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