a distributor’s path to profitable services...a distributor’s path to profitable services...
TRANSCRIPT
A Distributor’s Path to Profitable Services
Featuring:
Kelly Squizzero, InforEric Smith, Modern Distribution Management
November 16, 2017
Sponsored by:
• Intro• Results from the 2017 Profitable Services Survey• Five tips for better serving your customers
– Know your customers – Communicate your value – Reevaluate existing services– Foster innovation– Consider technology
• Q&A
Agenda
Speakers
Kelly SquizzeroDirector,
Industry & Solution Strategy, Distribution
Infor
Eric SmithEditor
Modern Distribution Management
1Copyright © 2017. Infor. All Rights Reserved. www.infor.comInfor Confidential
Who is Infor?Infor is an enterprise software provider and strategic technology partner for more than 90,000 organizations worldwide. Our software is purpose-built for specific industries, providing complete suites that are designed to support progress – for individuals, businesses, and the world. We believe in the beauty of work, the importance of relationships, and the power of ideas to drive significant positive change.
MDM-Infor – Profitable Services Survey
What types of services do you provide?
MDM-Infor – Profitable Services Survey
64.3%
68.4%
74.5%
75.5%
88.8%
Jobsite delivery
Flexible shipping methods
Technical/product training
Next-day/same-day delivery
Inventory management (VMI, CMI, vending, etc.)
Which services do you charge for?
MDM-Infor – Profitable Services Survey
Third-party logistics
Inventory management (VMI, CMI, vending, etc.)
Engineering/design services
Service and repair
Next-day/same-day delivery
22.5%
25%
27.5%
43.8%
55%
How do you know if customers will pay for services?
MDM-Infor – Profitable Services Survey
Tried implementing
25.3%Implemented58.2%
Conducted surveys
16.5%
If you don’t charge, what prevents you from doing so?
MDM-Infor – Profitable Services Survey
It’s a nice thing to do
Other
Doesn’t significantly increase our costs
We gain more value by not charging
My customers expect this service at no charge
3.7%
8.6%
14.8%
44.4%
49.4%
67.9%
My competitor does not charge or it
How do you promote the services you offer?
MDM-Infor – Profitable Services Survey
Other
Through our sales people withexisting clients only
Email and online marketing efforts
In our print marketing materials
Openly on our website
Through our sales people with existing and prospective clients
6%
37.4%
48.2%
56.6%
59%
91.6%
How has demand for services changed in past year?
MDM-Infor – Profitable Services Survey
Slightly increased 42.2%
Stayed about the same
Significantly increased 24.1%
30.1%
Slightly decreased 1.2%
Significantly decreased 1.2%
I don’t know 1.2%
Manufacturer response: How can a distributor differentiate itself from the competition?
MDM-Infor – Profitable Services Survey
Knowledgeable salespeople 87.1%
Excellent customer service 77.4%
Relationship 51.6%
Product knowledge 38.7%
Strong marketing program 25.8%
Data sharing 25.8%
Other 16.1%
Manufacturer response: What are the most important services your distributors can provide?
MDM-Infor – Profitable Services Survey
Knowledgeable salespeople 71%
Excellent customer service
Product knowledge 45.2%
61.3%
Relationship 38.7%
Strong marketing program 29%
Data sharing 25.8%
Other 12.9%
Manufacturer response: What value do distributors bring?
MDM-Infor – Profitable Services Survey
Provide a stronger local presence
16.7%
40%
46.7%
63.3%
66.7%
70%
Better equipped to store and manage inventory
Better equipped to handle small orders
Provide more feet on the street to sell & service products
Other
Get inventory closer to the customer
Manufacturer response: What tools should your distributors have to better work with you?
MDM-Infor – Profitable Services Survey
Other
Point of sale information sharing
Automation
Real-time visibility into transactions
Ability to have integrated product/order system
Internet of things capability
24.1%
48.3%
48.3%
51.7%
58.6%
65.5%
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A Distributor’s Path to Profitable ServicesNovember 2017
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Pressure is on the rise!
Source: MDM Survey
67% of respondents indicate demand for services has increased
over the past 12 months.
67%
Customers expectationsDemand for service
Differentiation is Essential
Service as a source of revenue
70%
70% of respondents, when not charging for a service, are doing so because the
customer expects it for free.
45%
45% of distributors expect to generate 10% or more of their revenue from services by 2020, compared to 20% who say they are doing so today.
Source: Facing the Forces of Change Navigating the Seas of Disruption 2016
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Problem solving
Execution of the basics
Flexible IT capabilities
Great customer service all the time
“Yes I can” attitude
Customized solutions
Direct access to manufacturer
World class delivery service
Broad product offering
Inventory availability
Able to sourceproduct
PricingOrder online capabilities
Fast response time to RFQs
Value addedservices
Technical expertise
Live human answers
the phone
Product knowledge
Long term relationship
History of performance
Authorizeddealer
Responsiveness to inquires
and requests
Local presence
What differentiates your business?
In-house engineering
One stop shop
Counter sales
Lean VMI
Customized invoice
Innovative solutions
Take an interest in customers
business
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Communicate your value
Know your customers
Foster innovation
Reevaluate existing services
Consider technology
Five tips for better serving your customers - while growing your bottom line
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Know your customers
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Identify Customer Needs
Shadow Your
Customers
Obtain Customer Feedback
Set Up Customer Advisory Boards
Analyze Your
Competition
Track & Analyze
Customer Data
Conduct Market
Research
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Identify Customer Needs
Shadow Your
Customers
Obtain Customer Feedback
Set Up Customer Advisory Boards
Analyze Your
Competition
Track & Analyze
Customer Data
Conduct Market
Research
Conduct Market
Research
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Identify Customer Needs
Shadow Your
Customers
Obtain Customer Feedback
Set Up Customer Advisory Boards
Analyze Your
Competition
Track & Analyze
Customer Data
Conduct Market
Research
Obtain Customer Feedback
Conduct Market
Research
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Identify Customer Needs
Shadow Your
Customers
Obtain Customer Feedback
Set Up Customer Advisory Boards
Analyze Your
Competition
Track & Analyze
Customer Data
Conduct Market
Research
Obtain Customer Feedback
Conduct Market
Research
Set Up Customer Advisory Boards
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Identify Customer Needs
Shadow Your
Customers
Obtain Customer Feedback
Set Up Customer Advisory Boards
Analyze Your
Competition
Track & Analyze
Customer Data
Conduct Market
Research
Obtain Customer Feedback
Conduct Market
Research
Shadow Your
Customers
Set Up Customer Advisory Boards
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Identify Customer Needs
Shadow Your
Customers
Obtain Customer Feedback
Set Up Customer Advisory Boards
Analyze Your
Competition
Track & Analyze
Customer Data
Conduct Market
Research
Obtain Customer Feedback
Conduct Market
Research
Analyze Your
Competition
Shadow Your
Customers
Set Up Customer Advisory Boards
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Identify Customer Needs
Shadow Your
Customers
Obtain Customer Feedback
Set Up Customer Advisory Boards
Analyze Your
Competition
Track & Analyze
Customer Data
Conduct Market
Research
Obtain Customer Feedback
Conduct Market
Research
Track & Analyze
Customer Data
Analyze Your
Competition
Shadow Your
Customers
Set Up Customer Advisory Boards
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Communicate your value
“More and more distributors are measuring, recording, and communicating the value they provide to their customers in monetary terms”
Source: Facing the Forces of Change Navigating the Seas of Distruption 2016
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Return on Investment
Risk Time Brand
Consider the following when determining value
How does your service help your customer make money or save money?
How does your service reduce risk for your customer?
How does your service save time, speed time to market, or maximize the value of time?
Does your brand bring something of value to the table that is worth paying for?
15
Customer is getting benefits or outcomes
they require
Services are cost competitive
Customers are satisfied, expectations are met, and they are
receiving value
Services are delivered within the
set expectations
Meet or exceed expectations
• Scorecard– Order line item fill rate– Order fill rate – Order complete – ASN timeliness– On time delivery – Order accuracy – Invoice accuracy
• Service level agreement– First time fix rate– Average response time– Equipment up time– Mean time to repair
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Reevaluate existing services
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• Does your customer still need the service?• Are you still providing ROI, reducing risk, saving time? • Are you adjusting services to meet changing customer needs?
VALUE TO YOUR
CUSTOMER
Reevaluate existing services
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• Does your customer still need the service?• Are you still providing ROI, reducing risk, saving time? • Are you adjusting services to meet changing customer needs?
• Does the service provide differentiation?• To what degree does the service increase customer stickiness?• Do you need to adjust services to meet your companies changing business objectives?• How important is the target market for this service to your business?
VALUE TO YOUR
CUSTOMER
VALUE TO YOUR BUSINESS
Reevaluate existing services
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• Does your customer still need the service?• Are you still providing ROI, reducing risk, saving time? • Are you adjusting services to meet changing customer needs?
• Does the service provide differentiation?• To what degree does the service increase customer stickiness?• Do you need to adjust services to meet your companies changing business objectives?• How important is the target market for this service to your business?
• What process improvements are needed to more efficiently track and manage this service?
• Are there technologies that can be leveraged to streamline processes and improve efficiencies?
VALUE TO YOUR
CUSTOMER
VALUE TO YOUR BUSINESS
EFFICIENCY
Reevaluate existing services
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VMI case study EFFICIENCY
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Customer
Customer drops empty bin with RFID tag into
kiosk for scanning
1
VMI case study EFFICIENCY
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Distributor Customer
Customer drops empty bin with RFID tag into
kiosk for scanning
1
Distributor immediately receives inventory
replenishment notification
2
VMI case study EFFICIENCY
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Distributor Customer
Customer drops empty bin with RFID tag into
kiosk for scanning
1
Distributor immediately receives inventory
replenishment notification
2
Customer order automatically
created. Distributor picks inventory
3
VMI case study EFFICIENCY
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Distributor Customer
Customer drops empty bin with RFID tag into
kiosk for scanning
1
Distributor immediately receives inventory
replenishment notification
2
Customer order automatically
created. Distributor picks inventory
3
Distributor delivers inventory on next run
4
VMI case study EFFICIENCY
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Distributor Customer
Customer drops empty bin with RFID tag into
kiosk for scanning
1
Distributor immediately receives inventory
replenishment notification
2
Customer order automatically
created. Distributor picks inventory
3
Distributor delivers inventory on next run
4
Customer benefits• Reduce inventory investment• Reduce warehouse space required• Eliminating stock outs and shortages• Monthly billing• Leverage technology with their customers
Distributor benefits• Reduce labor • Immediate visibility to inventory levels• Increase customer stickiness• Differentiates them from competitors• Helps win new business
VMI case study EFFICIENCY
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• Does your customer still need the service?• Are you still providing ROI, reducing risk, saving time? • Are you adjusting services to meet changing customer needs?
• Does the service provide differentiation?• How important is the target market for this service to your business?• To what degree does the service increase customer stickiness?• Do you need to adjust services to meet your companies changing business objectives?
• What process improvements are needed to more efficiently track and manage this service?
• Are there technologies that can be leveraged to streamline processes and improve efficiencies?
VALUE TO YOUR
CUSTOMER
VALUE TO YOUR BUSINESS
EFFICIENCY
Reevaluate existing services
• Are you tracking costs? Does your price produce an acceptable margin?• Are there services you have been giving away that you can charge for?• Are you doing enough to promote your service?• Are you evaluating customer profitability?
INFRASTRUCTURESUPPORT
PROFITABILITY
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Customer profitability
How much should you continue to do for this customer at no charge?
What price does a customer deserve to pay?
Sales volume• Net sales amount
Profitability• Gross margin amount• Gross margin percent
Loyalty• Number of orders • Coefficient of variation for
days between orders• Number of product
categories purchased…
Cost-to-serve measures • Average days to pay• Special item and/or nonstock
transactions as a percent of total record count
• Override transactions as a percent of total record count
• Returns as a percent of total record count
• Average amount per order • Average lines per order • Average amount per order line • Number of invoices…
PROFITABILITY
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• Does your customer still need the service?• Are you still providing ROI, reducing risk, saving time? • Are you adjusting services to meet changing customer needs?
• Does the service provide differentiation?• How important is the target market for this service to your business?• To what degree does the service increase customer stickiness?• Do you need to adjust services to meet your companies changing business objectives?
• What process improvements are needed to more efficiently track and manage this service?
• Are there technologies that can be leveraged to streamline processes and improve efficiencies?
VALUE TO YOUR
CUSTOMER
VALUE TO YOUR BUSINESS
EFFICIENCY
Reevaluate existing services
• Are you tracking costs? Does your price produce an acceptable margin?• Are there services you have been giving away that you can charge for?• Are you doing enough to promote your service?• Are you evaluating customer profitability?
INFRASTRUCTURESUPPORT
PROFITABILITY
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Foster innovation
“Innovation distinguishes between a leader and a follower.”
Steve Jobs
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How to create an innovative culture • Starts at the top • Remove all organizational barriers
which are stopping people from communicating
• Make innovation the responsibility of all employees with appropriate objectives for each and every functional area
• Award innovation and best cost-cutting ideas
• Let people know it’s ok to take measured risks
Capitalize data
Existing and new sources of data
IoT
Leverage expertise
Expand on what you do best
Create services for new customer
segments or new markets
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Quantify value Develop GTM plan
May be easier to acquire skillsand service than to build
from the ground up.
New services opportunities
For both your customerand your business.
Target marketCompetitive pricingSkills assessment
Sales training Marketing
Consider acquiring
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Consider technology
Source: Facing the Forces of Change Navigating the Seas of Distruption 2016
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COMPREHENSIVE DIGITAL STRATEGY
Cloud
IoT
AnalyticsPredictive / AI
Customer engagementeCommerce / CRM
Deep functionality ERP / Service Applications
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Agility
On-DemandUbiquitous, Scalable,
Latest Software
Why cloud? Cloud cuts cost, reduces risk, enables change
Cost
ServiceTransparency, Predictability
Resource optimization, OPEX
Continuity
Class leadingSLA, DR,
Security, Compliance
Drives investmentin innovation
Accelerates business change
Raises confidenceand assurance
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CollaborationAPI/ Process integration
Workflow /Alerts
Documentmanagement
Embeddedanalytics
Technologies to maximize efficiency and improve your service offering
Reporting
UX Search
Mobility
Homepages
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Communicate your value
Know your customers
Foster innovation
Reevaluate existing services
Consider technology
Take action!
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A Distributor’s Path to Profitable Services
November 16, 2017
Sponsored by:
Questions?