5 Business Planning Tips To Boost Distribution Innovation

Innovation in business planning is the key to success for distributors. Most companies will say they are innovative, but in fact they are not.

According to a blog post on Cloud NetSuite, the official NetSuite blog, “…most wholesalers and distributors are entrenched in their existing business model and legacy distribution software, incrementally tweaking it to try to boost sales or cut costs by a point or two.”

Such lack of foresight in business planning and innovation will hinder growth for many distributors and, as a result, these companies will be unable to keep up with changing markets.

How can distribution companies boost innovation in their business model? The blog post offers five traits which highly innovative companies share. Working these suggestions into your business planning can have a positive effect on your company’s success in the marketplace.

1. Any employee should be able to explain the business model: As the Cloud NetSuite blog post notes, “if employees can’t understand the way the company makes money, they can’t intelligently reinvent it.” If your business process is esoteric or too complicated to be easily explained, there’s a good chance you’re losing out on profits due to reduced efficiency and confused direction.
2. Innovation has to be a line item in the annual budget: High-level strategy investment must be a part of the plan or innovation will stagnate. Business executives and employees should invest time and resources in reviewing business goals and directives.
3. Ideas should be tested in a “sandbox” environment: “Just as software needs testing, so do new business models. Early testing in a regional market or a virtual market helps prove or disprove the concept,” the blog post says. So when you’re finished with those strategy conferences, take time to test the new ideas in a safe, contained environment before rolling them out to the entire company or market.
4. Track trends in other industries: The blog post provides an example of a coffee distributor that reinvented its business model. Until recently, the coffee distributor sold most of its workplace coffee and snack products via phone or fax. However, after noticing how e-commerce giants like Amazon and Staples did business through their streamlined e-commerce sites, the coffee distributor decided to change its business model.

   According to the post, the strategy was an enormous success. The ordering system it implemented, which was built on the unified platform of NetSuite and SuiteCommerce, “…was a hit with customers … [because they can] place orders online and can select from a wide range of products, from coffee cups and chips to first aid and janitorial supplies.” By switching to an ERP system that integrated directly with CRM and e-commerce platforms, this company was able to execute its new business model, which is the fifth trait for boosting business planning.

5. The ability to execute: As the post notes, unless the coffee distributor had revamped its business processes in both the front-end and back-end, “it wouldn’t have been possible to automate all of the processes necessary for shopping, placing, purchasing, stocking, routing and delivering dozens of different products to its widely distributed customers.”

With a business model shift like the one described in the Cloud NetSuite post, a shift in technology must follow. Often outdated legacy software only serves to propagate archaic, inefficient business processes. Innovation and reinvention will help distributors to increase profitability, reduce costs and avoid stagnation.

Source: Cloud NetSuite, June 2013