Optimizing Small Distributors

Supply Chain & Distribution Research Consortium

The research team from the Texas A&M Global Supply Chain Laboratory (GSCL) is planning to conduct a research consortium on Optimizing Small Distributors. Following on the successful completion of the Optimizing Business Analytics and Optimizing Value Added Services consortia, this initiative will conduct applied research and develop practical methodologies and tools that can be implemented by consortium members to optimize one or more of the following: profitability, human capital development, pricing, sales and marketing, channel compensation, and distributor growth and market share. Participating companies will get access to all resulting knowledge created, methodologies and tools developed through workshops and education session.

Overview & Need

Today small distributors are facing unprecedented difficulties in technology, human resources and investment. Technology continues to change at a rapid pace, becoming less costly, and spurring innovation in operational efficiency as well as sales and marketing at distribution firms of all sizes. Best practices in process, human, and information capital development have demonstrated their importance in revenue management, improving customer relationships, enhancing the sales process, and reducing cost and risks. The demands of multi-generational buyers and new purchasing behaviors are pushing distributors to adjust internal structures and sales processes. Furthermore, consolidation is accelerating at both the supplier and distributor levels. Such consolidation may lead to realignment of the channel and territorial conflicts, challenging small distributors to remain competitive.

According to a Federal Reserve forecast, economic growth will remain in the 2% range over the long run. It is therefore imperative for small distributors to recognize both the challenges and opportunities in order to improve business processes, leverage new technologies, and effectively manage
assets, revenue and expenses. Much distribution research undertaken and trumpeted as recommendations and solutions for “distributors” has often been recommendations and solutions for “large distributors”. In a number of areas small distributors do not enjoy the same economies of scale large distributors do. It follows that it is unlikely that the best outcomes will result when small distributors adopt the best practices developed for large distributors. Put another way: it is unlikely that what is optimal for large distributors is also optimal for small ones. Thus, it behooves small distributors to invest in research that is customized to their circumstances.

Membership in the Optimizing Small Distributors consortium provides a small distributor with an avenue to obtain the latest advancements in distribution research in a customized and affordable way. The research will be custom in nature because members of the consortium will be the ones who determine the research focus. The research will be affordable because the cost of the research will not be borne solely by any one firm but instead spread over all members of the consortium.
This is truly a unique opportunity.

Objectives

The current business environment raises important questions for small distributors and their suppliers:

  • How should small distributors embrace analytics?
  • Should small distributors collaborate and coordinate?
  • What are the key performance metrics and benchmarks for small distributor asset efficiency?
  • How will the sales process evolve with IT advancements?
  • How can small distributors attract, develop, and retain talent?
  • What are risk mitigation strategies to improve resource utilization?

These questions lead to exploration of the following consortium objectives:

  • Develop small distributor practices in managing profitable growth and developing competitive advantage
  • Assess small distributors’ capabilities and gaps in regards to resource (human and asset) efficiency
  • Develop methodologies and tools to optimize efficiencies and the bottom-line for small distributors
  • Determine key process metrics for sales and operations efficiency
  • Identify a set of best practices for optimizing small distributors’ resource (human and asset) utilization and profitability
  • Analyze risk mitigation strategies
  • Benchmark solution processes
  • Develop roadmap to implement research findings

Solution Process

Even though some companies may be somewhat familiar with the issues previously discussed, understanding and implementing best practices and a structured methodology is a complex topic and will be crucial to improve efficiencies for small distributors. The development of these best practices, tools and metrics to improve the profitability of small distributors will be the focus of this consortium.

The steps in this consortium are:

  • Preliminary survey: Texas A&M will conduct research and survey challenges and opportunities for small distributors.
  • Kick-off: the first meeting will bring together companies to discuss their priority areas and engage them in the research process.
  • Workshops: Texas A&M will conduct a series of meetings with member firms to identify common practices and opportunities to optimize asset efficiencies, develop tools as well as quantify the impact of strategies to improve risk, responsiveness, utilization and/or profitability.
  • Final meeting: Texas A&M will host a meeting with members to share general findings and final feedback.
  • Education session: members-only education session on optimizing asset efficiency for small distributors based on research findings.

Consortium Deliverables

  • A platform for interacting with similar-minded, pioneering firms (kick-off and final meetings).
  • A company-specific research workshop.
  • Results, methodology and tools developed during this research:
    • Assessment of the small distributors’ capabilities (confidential to each firm)
    • Opportunities for optimizing asset efficiencies
    • A framework of tools, processes, methodologies and metrics
    • Best practices for optimizing small distributor profitability derived from GSCL research and consortium findings (shared best practices)
    • Roadmap for implementation
  • Two complimentary seats for educational sessions on consortium findings (a $4000 value).

Value to Members

  • Actively participate in research and gain a better understanding of the findings.
  • Gain competitive advantage by implementing innovative best practices and competitive strategies ahead of competitors.
  • Develop relationships by networking with pioneering firms.
  • Gain a valuable knowledge base, new methodologies and tools that will help the firm sustain a leaner and more profitable distributor.
  • Attend an educational program delivered by Texas A&M on consortium findings.
  • Information shared with the Texas A&M team will be kept confidential. Only general findings and practices will be shared with other consortium members.

Schedule

Membership Enrollment & Consortium Formation Apr – Sep 2018
Consortium Kickoff Meeting September 7, 2018
Conduct Research Workshops Sep – Dec 2018
Research and Develop Tools Jan – Feb 2019
Final Consortium Meeting Mar – Apr 2019
Develop Educational Program Apr – May 2019
Deliver Educational Programs Jun 2019 onward

The Benefits

  • Economical path to high quality research
  • Practical tools to improve your bottom-line
  • Competitive head start to cutting edge best practices
  • Network with other forward thinking firms
  • Educate your work force on advance techniques and tools

What is a research consortium?

A research consortium is a collaboration of companies, associations, universities and government agencies to conduct research with the objective of developing solutions to a problem or a challenge common to every participating organization by pooling their resources for achieving a common goal.

Why join a research consortium?

Companies often cannot afford to invest in some complex research and development due to the high cost and/or lack of the knowledge resources required to conduct such research. Research consortia are an effective path to low cost, high quality research essential to the growth of a company. Consortia also allow for the sharing of best practices and strategies between the cutting edge organizations that invest in such efforts.

Who should join this consortium?

This consortium will be beneficial to small distributors and their suppliers.

Consortium structure and fees

Membership is limited to a group of 25 companies to be an effective research group. The membership fee is $10,000. The fee will cover attendance in all consortium meetings and workshops. Travel expenses not included.

For more information about the Optimizing Small Distributors Research Consortium, contact Peggy Jo Johnson at peggyjo@tamu.edu