Five ways Industry 4.0 tech can help distributors prepare for the future

By Khaled AlShami, vice president solution consulting, Infor Middle East & Africa

Distributors face complex pressures today, from global market volatility and supply chain disruption to inflation, rising energy costs and the need to continually exceed customer expectations. They also need to find better ways to attract and retain top talent while, at the same time, streamlining operations to be competitive.

Industry 4.0 technologies, such as artificial intelligence (AI), Machine Learning (ML), and Internet of Things (IoT) can help distributors address this myriad of challenges. Such technologies are already facilitating a range of innovations for the distribution industry. And more importantly, advancements are making these technologies more attainable to a greater number of organizations. Here are five ways in which these technologies can help distributors to future-proof their businesses.

1. Leveraging AI & ML to improve customer service

There are countless ways for organizations to mine the data they’ve collected, but historically it has proven to be too pricey or time consuming to be worth the investment. With AI and ML, making accumulated data actionable and delivering value are now attainable goals. With these technologies in place, distributors can more easily anticipate the future needs of customers based upon past and present activity and make product recommendations tailored to each customer’s needs and preferences.

1. Reducing costs and responding faster to demand fluctuations

When demand can be better anticipated, it will inform purchasing decisions so that inventory discrepancies are minimized. Distributors need to have the right amount of inventory at any given time because there is a cost associated with having too much or too little inventory. It’s now possible to use modern AI and ML algorithms to weave in more real-time external factors such as weather, social media, shifting trends, and impacts from the pandemic to become even more accurate. Better forecasting will result in fewer lost sales due to lack of inventory and improved customer satisfaction and retention.

1. Using integrated supply to change customer relationships

One way to solidify a partnership with a customer is to implement an integrated supply or vendor managed inventory (VMI) relationship. In this scenario, both the distributor and their customer agree in advance that certain inventory will be managed and maintained directly by the distributor at the customer’s location.

While the intricacies of this kind of engagement previously might have been cost prohibitive, new technologies promoting greater transparency, automation, and IoT have made VMI partnerships very attractive. A key use case for illustrating this benefit centers on the practice of leveraging day-to-day buying patterns through IoT and automating replenishment of products based on collected daily insights. This way, a distributor receives an automated message of what inventory was used each day. Based on what was used, the message will trigger replenishment and billing activities.

1. Improving margin accuracy to increase revenue

In an industry accustomed to operating under intense margin pressure, setting the right price for specific products has never been more critical to sustaining business growth and day-to-day performance.

With AI making an increasingly powerful appearance in business processes and management tools, it can take over many of the dull and time-consuming tasks that workers used to put up with, such as continuously reviewing pricing strategies and monitoring sales data to identify margin anomalies or trends.

1. Implementing automation tools to empower employees

Making everyday tasks easier is a great way to increase job satisfaction and hold onto the talent you currently have while enticing new hires to join you. With a cloud solution, the primary tasks associated with managing and maintaining the systems become the solution provider’s responsibility. Once you’re in the cloud, new opportunities arise with AI and ML projects that can distill large amounts of data into actionable insights. Even something as simple as accounts receivable automation uses AI technology to streamline the process, resulting in better cash flow results.