AI in wholesale distribution: Finding human-machine synergy
In their excitement about the potential of AI to transform business, distributors shouldn't overlook their workers. AI-human collaboration is key to success.
If 2023 (and the years before it) taught us anything, it’s that we need to be able to adapt, as well as react. The question isn’t whether things will happen – they will – it’s how businesses will respond, and in doing so, stand out and succeed.
So, what are the top wholesale distribution trends in 2024?
The industry’s trends continue to ride waves of rapid transformation and disruption, whether from economic volatility, new technologies, geopolitical conflict, or environmental requirements.
And there’s the relentless competition with many new players aiming to disrupt the market. Using an efficient supply chain as a point of difference is a hard ask; if anything, it’s table stakes these days, so how will businesses remain competitive?
5 wholesale distribution trends to watch
As a vital link in the global supply chain, wholesale distribution’s impact is far-ranging. According to the National Association of Wholesale Distributors, the industry counts more than five million workers in the US alone and accounts for one-third of the country’s GDP.
Across North America, there are about 390,000 wholesale distributor companies, according to the US Census Bureau.
Throughout 2024, the industry will remain under tremendous pressure to shed old habits and adapt to new customer preferences and ways of doing business.
Keep an eye on these wholesale distribution trends in 2024:
- Looking to AI for operational efficiency
- Technology drives growth + transformation
- B2B commerce personalization
- Increasing focus on sustainability
- Talent recruitment + retention
1. Wholesale distributors look to AI in 2024
Businesses that have a cloud ERP in place may already be using some artificial intelligence tools in their digital inventory and warehouse management, and large or small, you can bet distributors have high expectations for AI this year, making it a top trend.
Interest in AI is high across all industries. According to Deloitte’s State of AI in the Enterprise 5th Edition, 94% of global business leaders view it as vital to remaining competitive over the next five years.
For distributors, AI and machine learning promise to help optimize inventories and automate warehouse processes to reduce delays, boosting efficiency along the entire supply chain. Improved forecasting, pricing, and personalized customer engagement are other potential AI benefits for wholesale distribution.
While AI is the current hot trend, distributors must put it into the right context for their organization and find a way to get started without overengineering their initiatives.
2. Tech-led transformation drives distributor growth
AI is a core piece of the tech-driven transformation that’s essential for growth in wholesale distribution in 2024.
With technologies like cloud, real-time data and analytics, robotic process automation, and IoT, distributors are transforming processes and business models to gain agility and competitive advantage.
For example, intelligent technologies can help a distributor create new programs that drive higher margin or larger sales volumes. Analytics can help a company pinpoint customer pain points and forecast demand trends. RPA can automate manual, routine tasks so that employees can focus on problem solving.
In order to succeed, however, wholesale distributors must have clear goals in mind for their digital transformation. They also need to go beyond trendy concepts to actual implementation.
A study by MIT researchers in the Harvard Business Review found that companies making fundamental changes in the way they operate, develop talent, and partner generate 70% or more of the potential value from their digital initiatives — much more than other companies.
3. B2B commerce personalization remains a top distribution trend
The modern B2B buyer is far different from years past, a fact wholesale distributors have been adjusting to for a few years now. They want things to be just as fast and frictionless as they are in their consumer lives, including shorter delivery times and more delivery options.
That means distributors have to be able to meet them and engage on their preferred channels, offer customization that includes pricing and tailor-made customer experiences.
But while 62% of companies surveyed by B2BMarketing feel they need to upgrade their commerce structure to boost personalization, 49% don’t have a documented personalization strategy for their digital channels.
According to the study, B2B sellers’ top personalization priorities include making it easier for customers to buy by reducing the number of steps in the purchase process.
Top distributors are transforming their processes to boost personalization. For example, Arrow Electronics Inc. implemented SAP Commerce Cloud to streamline and personalize CX on its digital channels. Improvements included a simplified log-in, individualized search results for user profiles, customer promotions, and price transparency.
Digitalization of wholesale distribution: A new role for IT
In order to succeed in their digital transformation initiatives, distributors should tap their IT team to drive change.
4. 2024 wholesale distribution trend: sustainability
Companies across all industries face increased requirements for product traceability, energy efficiency, and ESG reporting, making sustainability a business priority in 2024.
Sustainability is essential for meeting the needs of today’s B2B buyer. According to an Amazon Business report, 69% of B2B buyers work at companies that require purchasing from sellers with sustainable practices.
When distributors accept this reality, it can clarify the profitability side of sustainability. In an industry under relentless margin pressure, investing in sustainability can seem risky. But for distributors that lean into goals such as energy efficiency, reducing packaging waste, and obtaining certifications, the payoff can be a competitive breakthrough.
The circular economy will become more ingrained in B2B culture. Energy efficiency wherever it is found, whether in logistics or data storage, will have its own benefits, making operations more resilient and easily differentiated.
5. Distributors stay focused on talent recruitment & retention
Wholesale distribution’s labor shortage, which was exacerbated by the pandemic, likely won’t ease in 2024. Tackling the talent crunch will remain a priority for distributors this year.
A combination of factors, including older workers retiring and smaller population of younger workers who aren’t attracted to distribution are making it hard to find skilled warehouse workers. drivers. and front-line sales and support.
Distributors can make their workplaces attractive to younger workers by implementing digital processes and modern technologies. Employees that aren’t mired down in routine, manual labor can focus on problem solving and strategy for more fulfilling work.
Distributors also can showcase their corporate social and environmental efforts to attract workers, especially young, socially and eco-conscious ones.
For example, Grainger, which was named to Fortune’s Best Workplace for Women list two years in a row, has a number of initiatives to support women in the workplace, including a Women’s Business Resource Group that connects women and their allies across North America.
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Wholesale distribution in 2024: Keep calm and carry on
The challenges facing wholesale distributors can seem daunting, but those that embrace technology and aren’t afraid to change are finding success.
The most effective transformation involves a fundamental shift from simply selling products to becoming a trusted partner who collaborates with customers to anticipate their needs and deliver the best outcomes.
This kind of change doesn’t happen overnight, though. In 2024, distributors can’t waste any time in their transformation journey.
