While geographical expansion and new product lines are important for growth, even more crucial is resource planning and supply chain management systems.
A successful distribution channel comprises a perfect partnership between manufacturers, distributors, resellers and system integrators. Manufacturers depend on distributors and channel partners to reach out more efficiently and cost-effectively to end customers. But how can a distributor differentiate itself? What are the prerequisites to effective distribution? 360 Magazine spoke to several key distributors in the country to understand the secret behind their success.
Growth Factors
A few interesting points emerged, which seem to be the common link behind all these highly successful businesses.There is a lot of focus on innovation. going retail, foraying into untested terrains, trying out new business models, etc.
Many have tapped the lucrative mobile phone business and have managed to enhance both top line as well as bottom line figures. Some are trying out the FMCG distribution model, which promises sure returns on investments. And while others may have stuck to traditional business models, they have been experimenting with new product lines.
There has also been a lot more emphasis on geographical expansion in the last year. While the industry has been talking about B&C class cities and its potential, distributors have moved beyond this and are now focusing on growing new markets in the C, D and E class cities. Almost all distributors have set up offices in newer cities and have appointed new partners.
Systems and Processes
But what is even more important than either innovation or geographical expansion is the need for systems to manage this growth. Said Paras Shah, managing director, Neoteric, .Managing growth is the most difficult task for many organizations, especially run by first time entrepreneurs. Hence, it is imperative for distributors to develop systems and processes before proceeding to the next level of growth..
Systems have to be put into place before considering expansion. Growth could actually get stunted if these are not in place to ensure efficient functioning. Most enterprises already have an ERP system in place to handle complicated functions like billing, accounting, planning, inventory control and scheduling.
Cyberstar, for instance, is investing in ERP solutions. It plans to phase out its legacy system over the next quarter while transferring existing data onto the new one. Says Raj Rathi, managing director, Cyberstar, .We are junking our old systems because beyond a particular point it cannot take care of the business.. Adds Jitendra Kulkarni, CEO, Redington India, .Systems and processes act as the hygiene factor in distribution without which you cannot scale your business. This, combined with adequate finance, helps you to grow at the market rate..
But Suresh Pansari, managing director, Rashi Peripherals says that distributors also need to be quick in service and delivery. A distributor needs to be more innovative in its pre-sale and post-sale strategy to ensure quicker delivery. Pansari too reiterates the importance of efficient process and systems; he says .Distributors need to have a system in place to ensure faster delivery. Technology will help identify areas for improvement, which can in turn be translated into quicker turnaround time.. Rashi is already working on phasing out its old system and is putting an ERP system in place. Priya Ltd on the other hand has developed its own in-house systems to handle the idiosyncrasies of doing business in India.
Innovation
While systems are key to a successful business there are several factors, which stretch beyond this. In an ever-evolving business environment, distributors need to keep up with the demands of time. Innovation is something, which has to touch all aspects of business whether it is managing manufacturers, products, marketing or customers.
Almost all IT product distributors sells similar products, this is where innovative business processes come into play. It helps a distributor to differentiate itself and surge ahead of the competition. But here again effective use of technology can make a difference. Says Kulkarni, .Today, technology plays an important role because it is the easiest way a distributor can get innovative. The only area or only way that one can provide better value and still reduce cost of operation is through technology..
Adds Rathi, .Without innovation you cannot grow. Distributors have to move beyond pushing boxes, and look at offering its customer value-added service at a reduced cost. If you have your systems in place then geographical reach can be easily achieved..
In fact, Rathi feels that being innovative is much more important than delivery time. While Pansari reiterates that turnaround time is more important he agrees that being innovative is also crucial. But according to him the focus of innovation should be on how to reach the goods to the customer in the quickest possible time in the most economical way. It is also important to provide better logistics and more technical information to the SI.
Consensus
To manage growth efficiently and grow profitably is the aim of every distributor. And having systems and processes in place is a precondition for a distribution house. Having said that, it is also important to be innovative to manage that growth better, and be more profitable. Geographical reach is not a big barrier for any distributor. This can even be done at a latter stage. But, as Shah says, this doesn.t mean that you don.t grab an opportunity when it comes. If the fundamentals are strong, then even after entering late a distributor can win market share.
A successful distribution channel comprises a perfect partnership between manufacturers, distributors, resellers and system integrators. Manufacturers depend on distributors and channel partners to reach out more efficiently and cost-effectively to end customers. But how can a distributor differentiate itself? What are the prerequisites to effective distribution? 360 Magazine spoke to several key distributors in the country to understand the secret behind their success.
Growth Factors
A few interesting points emerged, which seem to be the common link behind all these highly successful businesses.There is a lot of focus on innovation. going retail, foraying into untested terrains, trying out new business models, etc.
Many have tapped the lucrative mobile phone business and have managed to enhance both top line as well as bottom line figures. Some are trying out the FMCG distribution model, which promises sure returns on investments. And while others may have stuck to traditional business models, they have been experimenting with new product lines.
There has also been a lot more emphasis on geographical expansion in the last year. While the industry has been talking about B&C class cities and its potential, distributors have moved beyond this and are now focusing on growing new markets in the C, D and E class cities. Almost all distributors have set up offices in newer cities and have appointed new partners.
Systems and Processes
But what is even more important than either innovation or geographical expansion is the need for systems to manage this growth. Said Paras Shah, managing director, Neoteric, .Managing growth is the most difficult task for many organizations, especially run by first time entrepreneurs. Hence, it is imperative for distributors to develop systems and processes before proceeding to the next level of growth..
Systems have to be put into place before considering expansion. Growth could actually get stunted if these are not in place to ensure efficient functioning. Most enterprises already have an ERP system in place to handle complicated functions like billing, accounting, planning, inventory control and scheduling.
Cyberstar, for instance, is investing in ERP solutions. It plans to phase out its legacy system over the next quarter while transferring existing data onto the new one. Says Raj Rathi, managing director, Cyberstar, .We are junking our old systems because beyond a particular point it cannot take care of the business.. Adds Jitendra Kulkarni, CEO, Redington India, .Systems and processes act as the hygiene factor in distribution without which you cannot scale your business. This, combined with adequate finance, helps you to grow at the market rate..
But Suresh Pansari, managing director, Rashi Peripherals says that distributors also need to be quick in service and delivery. A distributor needs to be more innovative in its pre-sale and post-sale strategy to ensure quicker delivery. Pansari too reiterates the importance of efficient process and systems; he says .Distributors need to have a system in place to ensure faster delivery. Technology will help identify areas for improvement, which can in turn be translated into quicker turnaround time.. Rashi is already working on phasing out its old system and is putting an ERP system in place. Priya Ltd on the other hand has developed its own in-house systems to handle the idiosyncrasies of doing business in India.
Innovation
While systems are key to a successful business there are several factors, which stretch beyond this. In an ever-evolving business environment, distributors need to keep up with the demands of time. Innovation is something, which has to touch all aspects of business whether it is managing manufacturers, products, marketing or customers.
Almost all IT product distributors sells similar products, this is where innovative business processes come into play. It helps a distributor to differentiate itself and surge ahead of the competition. But here again effective use of technology can make a difference. Says Kulkarni, .Today, technology plays an important role because it is the easiest way a distributor can get innovative. The only area or only way that one can provide better value and still reduce cost of operation is through technology..
Adds Rathi, .Without innovation you cannot grow. Distributors have to move beyond pushing boxes, and look at offering its customer value-added service at a reduced cost. If you have your systems in place then geographical reach can be easily achieved..
In fact, Rathi feels that being innovative is much more important than delivery time. While Pansari reiterates that turnaround time is more important he agrees that being innovative is also crucial. But according to him the focus of innovation should be on how to reach the goods to the customer in the quickest possible time in the most economical way. It is also important to provide better logistics and more technical information to the SI.
Consensus
To manage growth efficiently and grow profitably is the aim of every distributor. And having systems and processes in place is a precondition for a distribution house. Having said that, it is also important to be innovative to manage that growth better, and be more profitable. Geographical reach is not a big barrier for any distributor. This can even be done at a latter stage. But, as Shah says, this doesn.t mean that you don.t grab an opportunity when it comes. If the fundamentals are strong, then even after entering late a distributor can win market share.
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