Digital Transformation in Distribution

Digital transformation is gradually involving more and more sectors of the economy around the world, including in Russia. It is clear that it also cannot ignore logistics and distribution. It is also natural that there are not so many areas for transformation, since only those distribution companies that have long been integrated into the digital world can stay afloat and withstand the growing competition.

However, this process of transformation throughout multiple countries and industrial sectors does always go so smoothly. For example, Riverbed Technology reported the results of a study devoted to the challenges faced by companies on the way to digital transformation. More than 1,000 respondents from the following nine countries took part in the survey: USA, UK, Brazil, Germany, Australia, France, China, Singapore, and India. The respondents were decision-makers from companies engaged in retail, transportation, manufacturing, healthcare, and finance that have an annual income of more than USD 500 million.

The survey showed that almost all participants (99 %) confirmed the important impact of digital services and application performance on the bottom line. At the same time, 95 % of respondents confirmed that at the moment the implementation of the digital strategy within the company was impossible due to lack of funds, outdated network infrastructure, and non-transparent network processes.

Let's try to evaluate this transformation among Russian distributors, where it is mostly a marketing-related process.

When do you think your company started the transformation of distribution? What results have you achieved in this area in the last two years?

Anastasia Sokolova, Marketing Director of MERLION: The first step, which can be considered the beginning of a real digital transformation, was the decision to switch all key business structures to a single IT platform, which was adopted in 2001. This step led to the centralization of IT infrastructure and business management, as well as gave a new impetus to the digitization of business processes, thus increasing their transparency and efficiency due to the synergistic effect of automated interaction between individual employees or entire departments.

After 2001, when the base for digitization of distribution business was created, the company got opportunities for systematic deepening of digital transformation, optimization of previously created subsystems, introduction of new tools for analytics, planning and automation of routine operations. An important milestone of the past two years was the launch of the electronic document management system to interact with our partners. In addition, we are constantly improving the tools for placing orders via our channel partners, taking into account the new needs of integrators, resellers, and retailers. In particular, the multi-vendor server solution configurator has been improved to simplify and speed up the ordering process for complex IT products. Today, it is a semi-automatic process without involving engineers. We have also entered into the capital of the OTP, an integrator, and PRO IT, a developer of IT solutions. This will strengthen our VAD solutions, expand our skills and improve understanding of the processes that drive development in the market of system integration.

Does the company plan to expand its distribution business? Do you want to try your hand at the food or household appliances segments?

Anastasia Sokolova: We are very pragmatic with regard to such solutions and fully take into account the needs of the market and our partners. We started working with coffee distribution because our business partners were quite interested in cross-sales among companies which sell household appliances. At the same time, coffee producers were also interested in this, and we used our logistics capabilities to add their products to our portfolio. Thus, such a decision was beneficial for all stakeholders.

Has your company penetrated into new non-IT distribution areas in the last two years?

Anastasia Sokolova: As with coffee distribution, these processes are planned and evolutionary. We, in particular, are gradually expanding our business in the field of delivery of office supplies and goods for creativity. We have signed a number of exclusive distribution contracts with well-known international manufacturers, as well as acquired the popular Silwerhof brand. The fact is that we have a rich experience of successfully promoting our own brands. We know how to make a profit from this kind of activity in the long term by increasing product awareness through stable quality, efficient logistics, optimal range, as well as comprehensive support of partners.

In addition to office supplies, we pay great attention to the promotion of household appliances and electronics, focusing primarily on those well-known manufacturers who are interested in the Russian market. TCL, a major Chinese TV manufacturer, has become our exclusive partner, and we are also actively developing cooperation with Turkish brands, in particular Sinbo, and manufacturers from other countries that are targeted at our market.