How an Ai Copilot Can Modernize Distribution
In today’s make, move, and sell economy, distributors play a very critical role as the movers of goods between manufacturers and downstream in the supply chain to wholesalers, VARs, or retailers. More than ever before, distributors face immense pressures.
- Supply chains are being disrupted. The pandemic, supply shortages, and geo-political and economic friction have all had major impacts.
- Skilled worker shortages persist and the rising cost of labor.
- Higher inventory carrying costs due to the rising cost of materials with unprecedented inflation and higher interest rates unfavorably affecting the cost of capital.
- Unfavorable net impact on the bottom line as costs rise while competition squeezes profits.
What if Ai could help?
Explore how an Ai copilot can modernize distributors by optimizing operations, boosting efficiency, increasing sales, enhancing customer experience, and more.
Ai has the potential to shape the future by infusing contextual intelligence into your software driven organization. Through an internal ecosystem of contextually aware and industry-focused cloud business applications, Gen Ai transforms you digitally into a cognitive, intelligent, proactive, and adaptive distribution organization.
The Urgency Facing Manufacturers
More than ever before, distribution stands at an inflection point. B2B expectations are changing
rapidly while economic uncertainty looms. Customers want better, faster, and more cost-
effective products better tailored to their specifications.
Meanwhile, distributors fight to preserve already slim profit margins amid rising material and
operating costs, labor shortages, supply chain disruptions, higher interest rates, and
unpredictable market demand.
Though each distribution sub-vertical faces unique challenges, many share a common set of
challenges in the current dynamic business landscape.
Distributors Share Common Pressing Business Needs
While distribution sub-verticals like automotive/EV, electrical, electronics & high-tech, furniture, HVAC, industrial goods, machinery, lumber and building materials, medical devices, health supply, plumbing, lumber and others differ greatly in terms of products, processes, and regulations, there is an underlying common subset of business opportunities and pain points.
Omnichannel Selling: Distributors must navigate selling across multiple channels, including e-commerce, in-house sales through brick-and-mortar locations, and 3 rd party aggregators and mobile apps. It is a challenge to ensure a consistent customer experience from quote-to-cash across these omni channels effectively and efficiently.
Changing Customer Expectations: The market is more competitive than ever, with new entrants and established players vying for market share. Customers expect faster delivery, personalized product bundles, and seamless omnichannel interactions.
Increased Competition: The rise of digital platforms and direct-OEM-to-consumer models overlaps with the traditional role of distributors as the conduit between manufacturers and the downstream chain to the end customer. Distributors must find ways to add unique value beyond mere distribution.
Traditional Lines Blurring: Additionally, in these challenging business times, we observe a blurring of the traditional lines with more distributors aligning to a forward integration business model, to move upstream in the value chain. This leads to distributors launching house brands through their own “light manufacturing” or featuring outsourced manufacturing. Especially in an economic downturn, customers may look to save on purchases by being even more open to source equivalent distributor brands or bundled products rather than from the traditional OEMs.
Additional Elements: A range of additional business challenges including the need to:
- Provide exceptional pre-sales and post-sales support.
- Analyze and act on customer sentiment and buying behaviors.
- Optimize productivity and efficiency to accelerate operating speeds.
- Reduce operational and material costs.
- Enhance customer satisfaction and loyalty.
- Attract, train, and retain skilled workers.
- Ensure workplace safety and regulatory compliance.
- Gain visibility into operations and supply chain risks.
While a subset of business objectives aligns, each distributor adapts people, processes, systems, and data flows to meet the needs of their specific product lines, industry, regional factors, regulatory constraints, and so on. This makes relying solely on off-the-shelf technology solutions not the best business fit. Instead, distributors benefit from personalized software solutions tailored to their unique needs. The advent of Ai offers this flexibility.
Ai 2.0 to the Rescue: Specific Ways Ai Can Help Distributors
While the era of Generative Ai (GenAi) is just beginning, there is much excitement over the economic potential of this technology for businesses.
By constantly crunching large volumes of structured and unstructured data, Ai systems consistently identify patterns and insights humans, and acting on it, Ai has the potential to enhance virtually every aspect of distribution customer engagement, operations, and administration. Benefits span the supply chain, warehousing, moving of goods, and omni channel sales and customer touchpoints.
Let’s explore the specific ways in which Ai can meaningfully modernize distribution.
Deliver Exceptional Customer Experiences (CX)
- Provide rich timely product information and value creating bundles.
- Gen Ai and NLP deliver fast and satisfying engagement.
- Ai chatbots handle basic omnichannel customer interactions.
- Ai powered CPQ (configure, price, quote) to simplify complex purchase decisions.
- Ai also segments customers for tailored sales and marketing campaigns to boost loyalty.
AI-Driven Supply Chain Agility
- Alerts procurement if cheaper substitute components could meet build specs.
- Detects force majeure risks like strikes, material shortages, geopolitical supply disruptions.
- Recommends contingency plans like alternate suppliers, transport modes or delivery routes.
- Provides external event context like weather, traffic and global supply chain events for smarter forecasting and planning.
Intelligent Inventory and Order Optimization
- Tracks all products down to batch/serial/container IDs throughout supply chain lifecycle.
- Forecasts order volume changes based on sales trends, marketing campaigns, holidays etc.
- Recommends safety stock levels, reorder points and lead times for each product.
- Signals when stockouts or overstocks are likely to help prevent losses.
- Applies constraints like shelf life for perishable items to optimize fulfillment queue across all orders.
Predictive Fleet and Asset Maintenance
- Monitors fuel consumption, emissions, engine fault codes and subsystem anomalies in real time across vehicles.
- Diagnoses developing issues, predicts imminent failures, flags needed repairs.
- Telemetry alerts drivers immediately of problems before becoming severe.
- Optimally schedules proactive preventative maintenance considering asset availability across fleets/facilities.
- Reduces downtime and costs by fixing assets before they break.
Warehouse Operations Optimization
- Applies constraints analysis for labor, equipment, and dock availability to sequence highest priority orders first.
- Considers factors like shortest processing times, earliest due dates, product shelf-life limits.
- Matches real-time order demand with workforce capacity and inventory readiness.
- Guides warehouse pickers with augmented reality vision picking most efficient item selection routes considering inventory locations, heights, fragility, and weight.
Accelerated Issues Investigation and Remediation
- Rapidly analyzes sensor history across interconnected supply chain assets and events leading up to an anomaly.
- Identifies root cause candidates based on temporal and spatial correlation insights.
- Prescribes next best action guidance for operators to resolve issues quickly.
- Continuously predicts and mitigates future event likelihood.
Proactive Customer Care
- Notifies customers proactively about shipment delays due to external events like weather, traffic, or mechanical problems.
- Updates estimated delivery schedule accordingly.
- Offers options like partial shipment, product substitution or discounted priority upgrade for next delivery.
- Boosts satisfaction through superior transparency and service recovery options.
Compliance Risk Avoidance
- Alerts if temperature, humidity, or handling force thresholds exceeded at any point from manufacturing to end customer.
- Weighs severity of environment deviations against product test control limits.
- Makes accept/reject/further test recommendations to quality team.
- Logs digital chain of evidence for detailed product pedigree.
- Helps ensure products only get delivered if safe and efficacies stay uncompromised.
Final Word on Ai Use Cases
The list above just scratches the surface since Ai use cases are nearly endless. Whether it’s transportation, warehousing, supply chain disruptions, inventory management, asset maintenance, order orchestration, anomaly detection or even anticipating customer needs, Ai proves a transformational change agent across all aspects of distribution.
Data Engineering: What Ai Runs On
Your Ai copilot is only as good as the data used to train them. While many distributors have vast volumes of operational data, critical inputs may reside in information silos. Key sources that distribution GenAi solutions draw from include:
- Core business systems like CRM, ERP, inventory management, supply chain management, warehouse management, freight and logistics, rentals, risk management, compliance, audit, and more. These systems provide a wealth of operational data spanning customers, products, equipment, inventory, orders, fulfillment status, returns/refunds, staffing and more.
- Utilities and facilities management systems monitor the warehouse infrastructure itself – building management and HVAC system telemetry, energy consumption profiles, environment sensors (temperature, humidity, etc.), lighting systems, occupancy counters, noise detection, leak detection sensors on pipes or refrigeration systems, security cameras and access control systems. These offer insights into operating conditions and events that could impact staff safety, product safety or business operations.
- External data sources like weather, traffic, global supply chain events, commodity pricing, currencies or local happenings provide useful context for understanding internal data. If a snowstorm shuts down trucking routes, for example, shipments and deliveries get delayed.
To maximize the impact of the investment, distributors will need to create data pipelines from their existing data systems before deploying Ai. Ai uses data engineering best practices to clean, normalize, organize, and structure the data so it can easily train on the aggregated data. This allows Ai to surface highly valuable insights.
Complementary Technology Innovation
While crafting an Ai strategy for distributors, it is important to consider complementary industry 4.0 technologies that work together with Ai in meaningful ways.
- Natural language processing (NLP) for more intuitive engagement internally and externally with your brand.
- IoT and edge devices placed throughout warehouses, vehicles and shipping containers feed sensor telemetry to Ai so it can monitor almost any condition – temperature, humidity, handling roughness, door open/close status, motion and more. Edge devices analyze real- time data at the source for quick reaction without needing cloud connectivity. Digital twins to virtualize products and operations data.
- Mobile apps and dashboards deliver insights to distribution center managers, warehouse staff, equipment operators, drivers, and field technicians so they can take appropriate actions based on Ai recommendations. Apps also enable customers and vendors to engage for better shipment visibility.
- Immersive Interfaces with AR/MR overlay visualized data insights directly in workers’ line of sight on tablets, mobile devices, or heads-up displays for training, assistance, and remote collaboration.
- Blockchain enhances supply chain transparency and traceability, inventory management and order fulfillment when integrated with Ai. This combination aims to eliminate losses from theft, counterfeiting, waste and more.
- Intelligent Process Automation and conversational Ai streamline processes by automatically executing repetitive manual tasks. Integrating IPA bots with chatbots lets customers easily get order status updates, refund info and answers to FAQs. NLP can really boost the intuitive nature of customer engagement.
- Cybersecurity provides critical protection given increased reliance on connected systems and use of customer data. Ai itself even enhances security threat detection and response capabilities.
Together these technologies modernize distribution operations and enable smarter decision
making.
Getting Started with Ai Strategy and Implementation
Ready to leverage Ai to modernize your business? Collaborating early with an Ai services company that deeply understands business, your industry, has extensive background in data engineering for Ai, and has experience implementing scalable solutions on the cloud & Ai platforms from Microsoft Azure, Amazon AWS, and others. They will work closely with you to implement the technology solution needed to achieve the desired business outcomes. Here are some pro-tips:
- Partner Selection: Choose an experienced partner who can tailor an Ai solution for you.
- Ideation & Discovery: Assess your needs to identify the pain points that Ai could alleviate.
- Data Engineering: What data sources do you already have? Identify any gaps.
- Start Small: Identify and prioritize one or a few meaningful use cases before expanding.
- Integrate: Blend Ai seamlessly with your existing systems.
- Change Management: Communicate your Ai strategy clearly and help your people through the adoption curve.
- Operation: Deploy the solution. Monitor tangible benefits. Tune as needed. Expand.
Early adopters gain sustained competitive advantages. The future is Ai now – let’s talk about
making it work for you!
Vish Thirumurthy. Tev5 Digital. Rev B
#distribution #ai #artificialintelligenceforbusiness #artificialintelligence #genai #aicopilot #digital #digitaltransformation #digitaltransformationjourney #digitaldistribution #industry40 #industry4point0 #tev5digital
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- February 12, 2024