Brian A. Renstrom
Partner

Michael C. Pelletier, MBA, MSCS
Partner

As the pace of change continues to accelerate for manufacturers, distributors and retailers (MDR) of all sizes, we see four driving forces at play: Globalization, Digitization, Rationalization and Transparency. We will take a quick look at defining these for you, but, more importantly, we will describe how technology, more specifically the cloud, can enable MDR companies of all sizes to manage and take advantage of these forces to improve your business.

Globalization

The ability to compete anywhere in the world is the new reality. Customer demand should know no borders. Your ability to attract, service, procure and deliver to customers and suppliers anywhere in the world is becoming a necessity to remain viable.

Digitization

Thanks to companies such as Amazon and Apple, customers now expect every organization to deliver products and services swiftly, with a seamless customer experience. Many traditional organizations can’t meet these expectations. Customers won’t say it this way, but they are going to require an overhaul of business process, intuitive interfaces, 24/7 availability, real-time fulfillment, personalized treatment, global consistency and zero errors. To meet these high customer expectations, companies must accelerate the digitization of their business processes.

Rationalization

Customers are more closely defining those suppliers that they will work with. Cost, quality and time are the metrics that customers are measuring their suppliers against, with an eye toward reducing the number of suppliers from the pool in which they work. Those that make the cut are becoming more intimate with those customers, and technology is allowing a more symbiotic partnering relationship.

Transparency

The ability to become more connected with your customers and suppliers is critical. Your customers are no longer content to wait on the phone to check an order; they want to access your website to get their order status right now. Your suppliers stand ready to drop-ship your orders in real time rather than forcing you to tie up capital in inventory. Channels like Amazon are ripe to drive additional sales. Your operations have to be interconnected with customers, suppliers and partners, enabling real-time information exchange on demand.

These market forces, along with the availability of cloud-based solutions will drive MDR companies to embrace new technology in order to compete in the next five years. So how does cloud technology enable organizations to rethink their approach in these areas?

Globalization

Most organizations that have historically had a localized presence, but have seen the need to expand certain aspects of their business operation globally, have been encumbered by the traditional 9-5 work week support for IT. Whether it’s your ERP, email or a CRM system, the folks in China for example, who are manufacturing your product, expect to have access to those systems. 

These needs beget one of two historical approaches: set up a complete IT infrastructure overseas or build out your current infrastructure with additional levels of fault tolerance, uptime and resiliency. Both of these options are expensive and require significant resource investment.

With the advent of cloud computing resources, specifically Infrastructure as a Service (IaaS), organizations can quickly provision servers in an environment such as Microsoft’s Windows Azure platform that benefit from geographically redundant data storage, automatic failover to other sites and the ability to scale the environment up or out to support the continued growth of the organization. Unlike traditional hosted scenarios, as soon as the need diminishes (seasonality, event-based demand, etc.) there was no investment in hardware and software that needs to “keep running”. You can simply turn off or downsize the infrastructure and stop paying for its continued operation.

Digitization

Websites and mobile applications for almost anything you can think of are the norm today. However, while many businesses have capitalized on the consumer side of this digital reach, many have not embraced the business-to-business aspect. Those that have done so have typically taken a backend electronic data interchange (EDI) type of approach. While this might allow a transaction to occur more easily, it doesn’t help the sales person that wants to review the last ten orders that a customer has placed with the organization.

Through the use of a variety of cloud-based technologies, it is easier than ever for organizations to create web and mobile applications that allow the sales person to not only see the last few orders, but to also transact new business on a phone or tablet. Because of the pay-as-you-go nature of most cloud providers, there is often very little upfront investment in bringing a service to market. It’s the integration and scale that the cloud provides that will allow organizations to quickly shift and adopt to support the needs of the new world of work.

Rationalization

As organizations seek to select a smaller set of vendors and suppliers, the ability to stand apart becomes important, as does the ability to scale. Where transactions used to flow to four or five different vendors, you may now be the sole supplier. As such, your organization may need to shift into a more proactive mode as opposed to a reactive mode. 

Using some of the Machine Learning capabilities of the Windows Azure Cloud, smaller organizations can take advantage of predictive analytic capabilities previously available to only the largest organizations. This allows historical order data to be incorporated into future product shipments, inventory levels and even raw material purchases, in turn significantly shrinking the order-to-ship window and increasing your relevance with your customer.

Transparency

Multi-channel communication can be daunting as it requires significant understanding of different technologies (SMS, REST, HTTP, OAuth, etc.), but, more importantly, requires investment in resources to implement solutions that connect your data with your customers.

Cloud solutions can make integrating your on-premise assets with the myriad of consumption formats an achievable future state without the need for significant capital investment.

Globalization, digitalization, rationalization and transparency are the driving forces behind change for manufacturers, distributors and retailers. Understanding and utilizing cloud technologies can be significant catalysts in helping to jumpstart initiatives that will improve your business.

Michael is a partner in BlumShapiro’s technology consulting group, Michael consults with a range of businesses and industries on issues related to technology strategy and direction, enterprise and solution architecture, service oriented architecture and solution delivery. Michael currently holds Microsoft Certified Solution Developer (MCSD), Microsoft Solution Framework Endorsed Practitioner and Project Management Professional (PMP) certifications

Brian is the partner in charge of our business consulting services group, a broad-based consulting practice of over 50 professionals. He works with a range of businesses on issues related to strategy formulation and planning, merger integration, business performance management, supply chain, reengineering and systems planning, selection and optimization. Projects for which he has been personally responsible include the implementation of over 100 ERP and financial reporting software engagements for companies ranging in size from $25 million to $5 billion in revenue and process improvement, reengineering and merger integration engagements for front and back office areas of middle-market companies. Brian’s experience crosses industry lines including particular strengths in the manufacturing, distribution, professional services and high technology industries.

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