Key Takeaways
- Wholesale distribution is undergoing a significant transformation due to protectionist policies, geopolitical tensions, and climate volatility, requiring midmarket distributors to adopt digital transformation to remain competitive.
- Effective distribution requires a comprehensive overhaul of operating service models, with a focus on investing in people, data, and technologies.
- Implementing new service models that integrate human judgment with AI analysis can deliver next-generation customer experiences and generate value.
- A unified, intelligent platform can bridge the gap between human judgment and AI speed, and working with the right solutions partner is essential to achieve this.
- SAP solutions, such as SAP Cloud ERP, can help wholesale distributors increase supply chain resilience, improve customer experiences, and drive revenue growth.
Introduction to Digital Transformation in Wholesale Distribution
Wholesale distribution is undergoing a substantial transformation driven by protectionist policies, geopolitical tensions, and climate volatility. This has compelled midmarket distributors to adopt digital transformation to maintain a level playing field. The traditional distribution model is no longer effective, and distributors have been forced to choose between being low-cost volume leaders or adding high-value services to their offerings. To remain competitive, distributors must invest in people, data, and technologies to deliver next-generation customer experiences.
The Importance of Technology in Wholesale Distribution
A SAP research study found that 54.8% of midmarket companies are embracing new technology, and 53.3% feel that adopting AI is a high priority. However, the survey also reveals that growth opportunities can be hindered by the fact that 32% of employees are resistant to change. Mastering this technology divide requires implementing new service models that integrate human judgment with AI analysis to generate value. A unified, intelligent platform can bridge the gap between human judgment and AI speed, and working with the right solutions partner is essential to achieve this.
SAP Solutions for Wholesale Distribution
More than 24,700 wholesale distributors in 133 countries utilize SAP solutions to increase their supply chain resilience. SAP Cloud ERP includes embedded AI technology that supports a wide range of critical functions, including inventory optimization, sales and operations planning, and demand forecasting. SAP solutions can help distributors unify processes and data in real-time, enabling them to make informed decisions and drive revenue growth. For example, Dis-Chem, a pharmaceutical company, leveraged SAP solutions to enhance warehouse operations management, automating tasks, boosting output, and improving overall efficiency.
Technology as a Talent Accelerator
The narrative around digital transformation has often focused on displacement rather than empowerment. However, intelligent technology, particularly when powered by AI, can be a powerful catalyst for workforce development and operational excellence. SAP’s integrated AI solutions can help distributors make every employee more effective, from onboarding to talent development. For instance, SAP SuccessFactors Onboarding, enhanced by AI agents and Joule, the SAP AI copilot, compresses the time-to-productivity for new employees, freeing up experienced staff to focus on high-value activities.
Service Model Transformation through AI
Wholesalers must contend with evolving customer expectations and the need for more personalized experiences. This shift in buyer expectations can be attributed to a new generation of buyers, with a demand for real-time inventory visibility, self-service ordering, and fast delivery. SAP can help wholesalers launch new, non-product-based service models tailored to a new wave of buyers, opening new streams of recurring revenue. By leveraging AI-powered solutions, wholesalers can provide an omnichannel customer experience, improving customer satisfaction and driving revenue growth.
Laying the Foundation for Successful Change
The challenge is not just technology adoption, but change management. To move forward, wholesalers need to ensure that their data is AI-ready. The effectiveness of large language models depends on the quality of the input data, necessitating that the data be consolidated, clean, and robust. SAP Cloud ERP, along with its evolving cloud and AI capabilities, enables midmarket distributors to gain real-time visibility into their operations. Scalability is critical for midmarket wholesalers, and SAP tools empower mid-market distributors with real-time visibility, enhancing inventory management, fulfillment speed, customer service, and agility to gain a competitive advantage.
Realizing Benefits Today and Getting Ahead Tomorrow
SAP Cloud ERP unifies business processes across departments, delivers embedded AI capabilities that boost productivity from day one, and builds a data foundation to fuel innovation from business models to better insights. SAP solution benefits include centralized data and real-time analytics, cloud deployment for flexibility and scale growth, embedded AI and machine learning capabilities, enhanced collaboration and supply chain transparency, proactive exception management, and out-of-the-box industry analytics tailored for distribution. By leveraging SAP solutions, wholesale distributors can realize benefits today and get ahead tomorrow, driving revenue growth, improving customer experiences, and optimizing operations.
