How Your Distributor Can Help You Through The New Economy

During the '80s and '90s, we focused primarily on picking, packing and shipping hardware and software to meet reseller needs. We also made the credit services possible to enable their purchases. Orders frequently would go to the reseller location prior to end-user delivery. Manufacturers filled our warehouses based on demand forecasts. Just keeping up with the soaring and oftentimes unpredictable volume kept everyone flying.

Multi-vendor technical support became increasingly critical over the past decade. Education and training programs were expanded to cover everything, from the basics of networking to the highest levels of vendor certification. Configuration and assembly services were introduced, saving resellers additional time as well as the high costs of operating and staffing facilities for this purpose. Over the past five years, resellers also began to rely heavily on distributors to ship product direct to their end users--typically while retaining the resellers' unique brand identities on shipping labels and packing documents.

A Radically Modernized Supply Chain

We're now entering a new era in our history where all the above services essentially represent the foundation of a radically modernized and more efficient supply chain. Most resellers today recognize that a much different set of services differentiates them while driving the profitability for their business models. The real money flows from consultation, design, installation, maintenance, troubleshooting and other value-added offerings. With product margins as low as they are, few resellers want to even touch the equipment except when it involves performing one of these foremost services. That reality grows stronger by the minute.

Manufacturers and publishers, meanwhile, want to tap the booming SMB market opportunity, and they usually recognize that resellers are the best way to serve and support this end-user wellspring. How they get the product there, however, comes down to what makes the most economic sense. What matters most to vendors is how well and profitably the product sells and performs. Resellers no longer may touch that product en route to the user, but they certainly play a huge role by recommending the elements of a comprehensive solution and making sure it all works properly. Given today's highly complex networked business environments, it's easy to see why related services reign in importance over product delivery matters. Sure, if the product doesn't arrive on time it can pose a major problem, but misdirecting a client on strategic technology concerns could have catastrophic repercussions.

In short, every solution provider ultimately must move toward a pure service model. There's little, if any, breathing room for a product reseller. The fundamental questions for each comes down to when and how they make this transition. Logistics specialists face the daunting challenge of helping thousands of resellers make this transition successfully.

As part of this industrywide charter, we are:
* Enhancing e-commerce offerings, including e-business storefronts for solution providers.
* Expanding system engineer teams to support solution providers' advanced technology requirements.
* Developing end-user billing and accounts receivable management services to offload this administrative burden from solution providers.
* Offering business development and consultation resources that help solution providers benchmark and improve cash flow and operational performance.
* Extending marketing services to support solution providers' end-user communication programs.
* Optimizing configuration and assembly services with Web-based tools, state-of-the art facilities and custom offerings based on solution provider demand.
* Revitalizing education programs in response to new market dynamics and the evolving needs of solution providers.

These advances are particularly challenging when considering the broad range of requirements they must address. No two solution providers are exactly alike, of course, nor should they be. What you should consider most carefully is exactly what makes you better than the next guy. What core competency do you bring to the equation that will set you apart in the months and years to come? What can be outsourced so that more focus can be placed on your true core competencies? And who can best perform ancillary services for you?

Look At It Under the Outsourcing Microscope

Sometimes it's difficult for a solution provider to outsource a traditional function like configuration and assembly, fearing that no one else can do it as well or that the customer or partner may cut you out of the loop. The far greater fear should stem from the possibility of not adjusting fast enough to the new supply chain paradigm where many such services have reached the point of commoditization. Anything that detracts from the epicenter of your business should be under the microscope as potentially worthy of outsourcing.

Today's marketplace rewards the swiftest, most cost-effective and innovative customer-centric operations. By leveraging each other, we have the greatest odds of meeting these demands. So what can you do to work toward this end? Here are four suggestions:
* Know your logistics partner and what services they offer or plan to, how the services work, and don't hesitate to make additional recommendations.
* If you haven't already done so, build an outsourcing plan and map out a timetable that redefines your model to optimize your value-added services revenue.
* Make sure you understand what is expected of your outsourcing partner and you to deliver the best quality results.
* Regularly evaluate the success of each outsourced service and communicate your observations back to the provider.

Making the transition to pure service provider clearly is easier said than done. Each step requires meticulous calculation and solid execution. Against the backdrop of fast-changing industry conditions, our interdependence is more pronounced than ever, our partnerships more diverse and our challenges beyond any past comparisons.

It is imperative we continue to attack and eliminate the inefficiencies that have plagued the value chain in recent times. The end customer's satisfaction is at stake. How we respond as an industry to deliver the services they need--not the product--will define our collective success.