Strategic value chain expansion: A distributor's imperative

In today's fast-paced market, distributors face a critical challenge: Identifying and capitalizing on new revenues streams for sustainable growth.

The landscape is shifting rapidly. Manufacturers are now selling directly to customers, and AI is making expertise less valuable in some areas. This evolution presents both risks and opportunities for those who are willing to adapt. 

Expanding the value chain, while potentially lucrative, requires careful navigation. It may challenge our established partnerships or create internal competition. However, broadening the supply chain and unlocking significant revenue potential is possible without compromising your core operations.

During recent conferences, I’ve had the privilege of listening to fellow distribution leaders share their personal experiences and ideas on expanding their value chains. Here are the key opportunities discussed:

1. Product portfolio diversification: Leveraging AI-driven analytics to identify and integrate complementary product lines enhances our traditional offerings. Beyond data mining and augmented business intelligence, AI is already being integrated into our transactional workflows for product advisory, product and pricing recommendations, and demand forecasting management. These are just a few examples of how AI is crucial for diversifying product portfolios. In essence, AI empowers teams to seamlessly incorporate new products in real-time.
2. Jobsite support services: Developing premium jobsite services to supplement skilled labor shortages within their customers' organizations. One compelling example shared with me included unskilled services of unboxing materials, placement logistics, and trash removal, allowing licensed trade professionals to focus on their craft. As a result, the distributor was able to directly improve their customers' margin and productivity while collecting additional revenue for their services.
3. Value-added services: Going beyond in-house assembly, kitting, and modifications, customers are introducing equipment maintenance and rental options, particularly for specialized tools. This presents a profitable area of expansion. While limited activities in these offerings can be handled on paper, scaling these kinds of opportunities can quickly benefit from having focused software solutions to manage and grow these service lines efficiently.

The evolving distribution landscape demands that you evaluate and execute strategies for growth and value creation. Rapidly expanding technologies like Generative AI and AI-enhanced robotic process automation are already being used by large organizations to further expand their value chain. The good news for everyone else, however, is that just because AI is new doesn't mean that it's out of reach. I'm pleased to say that Infor® has made significant progress in making this technology available to customers of all sizes.

Infor Augmented Intelligence Service: AI for everyone 

Our Infor Augmented Intelligence Service delivers key use cases like those discussed earlier (e.g., product advisory, product and pricing recommendations, demand forecasting management, etc.) as a service. This accelerates time to value and reduces the need for internal data science investment, making AI capabilities more accessible and actionable for distributors.

Infor CloudSuite Distribution & CloudSuite Distribution Enterprise: ERPs built for distributors

Built on the experience of thousands of customers across industries, Infor's cloud-based distribution software empowers businesses of all sizes. This industry-specific solution equips them with the tools to streamline operations, adapt to evolving market dynamics, and effectively manage supply chain risk. Its robust capabilities span order entry, pricing, supply chain management, and global localization.

Our distribution mindset has led us to develop solutions that enable the efficient execution of value-added services, including maintenance, field services, and equipment rental.

As distributors navigate this time of uncertain markets fueled by rapid technological advancements, I'm confident that by embracing new technology and diversifying their value chains, they can not only survive but thrive in this evolving landscape. The key is to remain adaptable, customer-focused, and open to new possibilities. Together, we can redefine what it means to be a distributor in the 21st century.

I invite my readers to continue to share their experiences and strategies in value chain expansion. Your insights are invaluable in shaping the future of this industry.