a distributor’s path to profitable services...a distributor’s path to profitable services...

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

Eric SmithEditor

Modern Distribution Management

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?

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?

Third-party logistics

Inventory management (VMI, CMI, vending, etc.)

Engineering/design services

Service and repair

Next-day/same-day delivery

How do you know if customers will pay for services?

Tried implementing

25.3%Implemented58.2%

Conducted surveys

If you don’t charge, what prevents you from doing so?

It’s a nice thing to do

Doesn’t significantly increase our costs

We gain more value by not charging

My customers expect this service at no charge

My competitor does not charge or it

How do you promote the services you offer?

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

How has demand for services changed in past year?

Slightly increased 42.2%

Stayed about the same

Significantly increased 24.1%

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?

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?

Knowledgeable salespeople 71%

Excellent customer service

Product knowledge 45.2%

Relationship 38.7%

Strong marketing program 29%

Data sharing 25.8%

Other 12.9%

Manufacturer response: What value do distributors bring?

Provide a stronger local presence

Better equipped to store and manage inventory

Better equipped to handle small orders

Provide more feet on the street to sell & service products

Get inventory closer to the customer

Manufacturer response: What tools should your distributors have to better work with you?

Point of sale information sharing

Automation

Real-time visibility into transactions

Ability to have integrated product/order system

Internet of things capability

A Distributor’s Path to Profitable ServicesNovember 2017

Pressure is on the rise!

Source: MDM Survey

67% of respondents indicate demand for services has increased

over the past 12 months.

Customers expectationsDemand for service

Differentiation is Essential

Service as a source of revenue

70% of respondents, when not charging for a service, are doing so because the

customer expects it for free.

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

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

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

Know your customers

Identify Customer Needs

Shadow Your

Customers

Obtain Customer Feedback

Set Up Customer Advisory Boards

Analyze Your

Competition

Track & Analyze

Customer Data

Conduct Market

Research

Shadow Your

Customers

Analyze Your

Competition

Track & Analyze

Customer Data

Conduct Market

Research

Conduct Market

Research

Shadow Your

Customers

Analyze Your

Competition

Track & Analyze

Customer Data

Conduct Market

Research

Conduct Market

Research

Shadow Your

Customers

Analyze Your

Competition

Track & Analyze

Customer Data

Conduct Market

Research

Conduct Market

Research

Shadow Your

Customers

Analyze Your

Competition

Track & Analyze

Customer Data

Conduct Market

Research

Conduct Market

Research

Shadow Your

Customers

Shadow Your

Customers

Analyze Your

Competition

Track & Analyze

Customer Data

Conduct Market

Research

Conduct Market

Research

Analyze Your

Competition

Shadow Your

Customers

Shadow Your

Customers

Analyze Your

Competition

Track & Analyze

Customer Data

Conduct Market

Research

Conduct Market

Research

Track & Analyze

Customer Data

Analyze Your

Competition

Shadow Your

Customers

“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

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?

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

• 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

• 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

• 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

EFFICIENCY

VMI case study EFFICIENCY

Customer

Customer drops empty bin with RFID tag into

kiosk for scanning

Distributor Customer

kiosk for scanning

Distributor immediately receives inventory

replenishment notification

kiosk for scanning

Customer order automatically

created. Distributor picks inventory

kiosk for scanning

Distributor delivers inventory on next run

kiosk for scanning

Distributor delivers inventory on next run

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

• 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?

VALUE TO YOUR

CUSTOMER

EFFICIENCY

• 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

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

• 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?

VALUE TO YOUR

CUSTOMER

EFFICIENCY

• 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

Foster innovation

“Innovation distinguishes between a leader and a follower.”

Steve Jobs

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

Leverage expertise

Expand on what you do best

Create services for new customer

segments or new markets

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

Consider technology

Source: Facing the Forces of Change Navigating the Seas of Distruption 2016

COMPREHENSIVE DIGITAL STRATEGY

AnalyticsPredictive / AI

Customer engagementeCommerce / CRM

Deep functionality ERP / Service Applications

Agility

On-DemandUbiquitous, Scalable,

Latest Software

Why cloud? Cloud cuts cost, reduces risk, enables change

ServiceTransparency, Predictability

Resource optimization, OPEX

Continuity

Class leadingSLA, DR,

Security, Compliance

Drives investmentin innovation

Accelerates business change

Raises confidenceand assurance

CollaborationAPI/ Process integration

Workflow /Alerts

Documentmanagement

Embeddedanalytics

Technologies to maximize efficiency and improve your service offering

Reporting

UX Search

Mobility

Homepages

Know your customers

Foster innovation

Consider technology

Take action!

A Distributor’s Path to Profitable Services

November 16, 2017

a distributor’s path to profitable services...a distributor’s path to profitable services...

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