What is Data Analytics for Distributors?

Product-centric brands face a number of challenges in distribution: increasing margin leakage as a result of unregulated discounting practices, poor profit visibility due to fragmented systems, and highly complex inventory processes that are difficult to scale. Not to mention, distributors also have difficulties with accurate demand forecasting and establishing profitable pricing strategies.  Why? Many of these challenges arise as a result of poor order intelligence: not having detailed visibility into their order systems. With AI-powered data analytics, distributors for product-centric brands have the power to drive smarter, more efficient business processes by transforming the industry and putting profitability front and center.  In this article, we look at data analytics for distributors and its impact on the industry can support distributors in making more profitable decisions about their order processes. Plus, we show you best practices for implementing data analytics systems and common pitfalls to avoid.

Data Analytics for Distributors: Impact and Benefits  

AI-powered data analytics for distributors is a game-changer, shifting the way product-centric brands make decisions to enhance profitability. Encompassing a wide range of data sources—such as market data, inventory management systems, enterprise resource planning (ERP) systems, Profit Maximization Platforms, and consumer behavior—data analysis sheds light on a company’s operations, workflows, and processes, providing insight that improves how the business is run.  Key benefits of using data analytics in distribution for product-centric brands include: 

•       Increased profitability by uncovering hidden insights: Using the right data analytics platforms, product-centric brands can identify margin-eroding issues and hidden costs in real time, enabling immediate correction and intervention. This leads to better decision-making and higher profitability.
•       Enhanced inventory management and demand forecasting: AI-powered data analytics enables distributors to better understand demand patterns, peak selling dates, and seasonal market fluctuations in order to accurately forecast future demand and minimize stockouts.
•       Optimized pricing with up-to-date data: In order to improve gross margin, distributors can minimize over-discounting before it begins to impact their bottom line, using optimal pricing strategies gleaned through real-time data analysis.
•       Better customer relationships through operational efficiency: Meeting and exceeding expectations is key to minimizing customer churn and increasing customer retention. With full visibility into distribution operations, product-centric brands can boost business performance by filling orders accurately and quickly. Data analysis helps fix inefficiencies, cut down on shipping times, and remove friction from checkout processes.

Data Analytics Tools for Distributors and Product-Centric Brands 

There is no shortage of distribution analytics software available to support product-centric brands as they work to transform processes and improve profitability. Supply chain optimization software, pricing optimization engines, real-time inventory management tools, predictive analytics platforms, variance analysis tools, and data visualization software are just some options on the market.  One that stands out for its ability to unleash profit potential at scale is Cavallo’s suite of software solutions. Distributors of product-centric brands are sitting on millions of data points in their enterprise resource systems. Cavallo seamlessly integrates with leading ERPs—such as Microsoft Dynamics 365 Business Central (BC), Microsoft Dynamics 365 Finance & Operations (F&O), Microsoft Dynamics GP, Infor, and Acumatica— to uncover hidden insights that help businesses make highly profitable decisions. Cavallo is modular in nature, so distributors can implement the full suite or a singular component into their business. The Profit Analytics™ solution is available for all ERPs.  Both a concept and a solution, Profit Analytics provides a thorough analysis of the entire order lifecycle from the moment an order is placed to when it is received by the customer. Combining multiple technologies such as visibility and monitoring, margin optimization, and in-depth analytics tools, Cavallo identifies profit-draining trends and margin-eroding issues. Data visualizations and variance analysis tools enable distributors to pinpoint profitability drivers and continuous improvement strategies.

Best Practices for Implementing Data Analytics in Distribution

Considering implementing data analytics tools for distributors? As with introducing any technology solution, it’s vital to follow best practices in order to maximize the benefits.

Start with Clear Objectives

Determine the key challenges your product-centric brand is facing with distribution. For example, is unregulated discounting eroding your profit margin or is the lack of real-time visibility impacting your ability to correct logistical issues? Are inaccurate inventory records leading to constant stockouts or are manual tasks creating slow and error-prone processes? Develop a clear objective based on the challenges you want to rectify.

Invest in Data Quality

Artificial intelligence data analysis tools can digest and review large swathes of data from your systems in seconds. However, if your system data is inaccurate, out of date, or full of discrepancies, this will impact the analysis. Clean and update data to ensure it is reliable and provides meaningful analytics for your product-centric brand.

Leverage Integrations

Distributors have access to a large number data points in their ERP systems. Integrate analytics tools, such as Cavallo’s Profit Analytics, with leading ERPs such as Acumatica, in order to streamline operations, share existing data, and uncover critical trends and opportunities.

Use a Phased Approach if Necessary

For some distributors, it may make operational sense to roll out data analytics technology in phases, starting in areas with the highest impact first. Many data analytics solutions are available in a modular design, so organizations can select individual components based on their needs. Support Employees with Training and Change Management Strategies Implementing a new technology can take some getting used to from an employee and leadership perspective. Ensure necessary personnel receive training for a smooth rollout. Implement change management tactics and clear communication for high adoption.

Focus on Profit-Increasing KPIs Across the Order Process

To meet your organizational goals with the data analytics tool, determine profit-increasing KPIs across the entire workflow. Track KPIs daily, weekly, and monthly, and make strategic adjustments to reach your objectives as necessary. Many data analytics tools, such as Cavallo’s Profit Analytics module, are designed specifically to improve profitability. For example, Cavallo leads to a 2-10x increase in pre-tax profit and 300 basis point increase in profit margin.   

Common Pitfalls in Adopting Data Analytics in Distribution

One of the most common issues that arises as distributors of product-centric brands adopt data analytics tools is underestimating the power of real-time data. In today’s fast-paced world, customers want orders processed at the speed of light—and distributors have to oblige to remain competitive. However, when business moves fast, so does the associated data.  Only solutions that offer real-time data analytics can provide the data intelligence distributors need. Cavallo enables distributors to take immediate action to minimize margin leakage and profit erosion before it has any drastic impacts on the company’s bottom line. With easy-to-digest data visualizations that guide quick decision-making, Cavallo provides actionable insights distributors can access at their fingertips in real time.  Other common pitfalls include neglecting the importance of data governance and not aligning technology with business goals. Without clean, accurate, and secure data that is updated regularly, data analytics tools can’t provide usable insights. Cavallo collects data from a range of high-quality sources to ensure optimal insights. In addition, Cavallo offers deep profitability-focused data, appealing to business goals set by leaders in sales, marketing, operations, and finance.

The Future of Data Analytics for Distributors: Cavallo’s Profit Maximization Platform

AI-powered solutions that provide data analytics for distributors are constantly evolving, transforming the way product-centric brands serve customers and appeal to investors. Real-time data analytics tools support distributors in accurately forecasting demand, setting optimal pricing, and addressing order process inefficiencies—leading to profit optimization.  Cavallo’s Profit Maximization Platform ensures distributors stay ahead of the curve, exceeding customer expectations with accurate and timely service, all while maximizing profitability. Seamless integration into existing ERP systems leverages your powerful data, while AI-powered analytics tools deliver unparalleled insights distributors can take action on now.  Contact us today to unlock the hidden potential in your business and transform your approach to profitability.