Wholesale Digital Transformation: How wholesale distributors drive economic recovery in Europe
Wholesale distributors operating in Europe face various challenges, including Brexit, the global pandemic and the Russia-Ukraine war. In the United Kingdom, Brexit has complicated the import and export of goods and hampered workforce recruitment and retention. The global pandemic added unpredictable demand, massive supply chain disruption and employee safety issues. Despite various forms of pandemic-related support, including business loans, grants and furloughs, many European businesses still suffer from the economic effects of COVID-19.
A perfect storm
The Russia-Ukraine war emerged before businesses fully recovered from the effects of the pandemic, causing shortages of corn, crude oil and fertilizers for crops and animal feed. The war disrupted supply routes, cutting off the supply of essential goods and commodities including food products, transport equipment, machinery, electronics, metals and chemicals. Re-routing ships and sanctions from Russia caused significant supply chain delays, container shortages and a sharp rise in shipping costs. The EU’s dependence on Russian energy has also caused oil and gas prices to surge, leading to the inevitable spike in prices across the supply chain, with much of Europe seeing double-digit inflation rates. A cost-of-living crisis, combined with an impending recession, threatens consumer confidence across Europe. Some unprepared distributors could experience broader adverse effects than they experienced during the pandemic. Wholesalers are faced with either passing supplier price increases further down the supply chain or absorbing all or part of these increases.
Grabbing the brass ring: greater supply-chain efficiency
Distributors try to avoid these economic issues by implementing intelligent business process capabilities that introduce greater efficiency and visibility into their supply chain to enable them to make smarter business decisions with their suppliers and customers. Isolated systems can’t achieve the current level of efficiency, accuracy and agility distributors need. A fully automated system that combines all the elements of pricing, vendor funding and customer incentives allows wholesalers to analyze and model what-if scenarios to enable them to anticipate and react to changes in supply and demand and show the related effects on the complete price waterfall, whilst protecting slim margins. Digital transformation and automation are critical to level up any wholesale distribution business. Artificial intelligence (AI) boosts operational efficiency through resource planning and allocation, merchandise pricing, quotations and purchase order management.
For your eyes only
With the surge of direct-to-consumer (D2C), distributors are now directly competing with their suppliers. In 2023, B2B personalization will continue to be a prevalent trend in wholesale distribution. Distributors will need to think carefully about their customer and supplier relationships. An innovative approach will be increasingly important to acquire customers, discover new revenue streams and increase customer loyalty. Offering customized pricing, rebates and discounts is essential to captivate, nurture and sustain customer relationships. Improving the speed and clarity of supplier alliances will maximize vendor programs and grow profitability and margins.