Introduction
Anyone working in the promotional products business long enough at some point comes to realize the inherent complexities of producing creative, custom products (i.e. anything you want on anything you wish) for end buyers. When you consider the low barrier of entry to become a distributor, its no wonder why attempting to digitally transform an industry comprised of over 3,500 supplier companies and nearly three-times as many distributors can feel a lot like herding cats.
Embracing widely-available new technologies such as cloud-based solutions has unlocked opportunities for companies in our industry and helps level the playing field. For smaller companies, industry-specific business management solutions are the most common go-to for those who are unable or unwilling to tackle the implementation of a complete ERP solution. To be certain, there is certainly no shortage of solutions available that can help smaller companies achieve a level of tech-enablement to accommodate nearly every budget or level of ambition.
Whether you’re a company running an ERP or a small start-up leveraging an industry-specific software, the key to digital transformation is the exchange of electronic data between trading partners. The hot-topic debate always seems to come down to data aggregation versus data integration. Let’s take a closer look at each and identify the key value propositions of each.
Making the Case for Data Aggregation
1. Product Research Capabilities
Companies that aggregate data (think SAGE, ASI and Distributor Central) provide an incredibly valuable service to companies of all sizes. Regardless of whether you are a sales rep working for a top-40 distributor or an owner/operator of your own micro-company, the sales process always begins with product research. Having access to the entire universe of suppliers from a single source helps distributor companies identify products to help meet their clients’ marketing goals.
The power of data aggregation also provides distributors with a promo-specific, Google-like tool to quickly and easily identify the supplier(s) that sell a particular item. In my opinion, this is the single greatest value that data aggregators provide to the promo industry.
While enabling product research capabilities for distributors across the industry’s 3500+ suppliers is an essential service, data aggregators also provide another valuable offering to companies in the promo industry.
2. Providing Technology Enablement for Smaller Companies
The second key value-proposition of companies that aggregate data is that they have the ability to provide technology enablement software to companies who cannot afford or simply do not wish to manage their own technology platforms.
With such a low barrier to entry (according to PPAI research, 91% of PPAI member distributors report annual revenue of $2.5M or less), our industry’s distributors need all the help they can get when it comes to digital transformation. Business service companies that aggregate data hold a valuable combination of industry expertise and technology know-how to provide technology enablement. Using the supplier data they aggregate as a foundation, these service providers can offer technology solutions to smaller distributors for building client presentations, providing order management solutions and hosting ecommerce sites.
Now that we’ve highlighted the value of data aggregation in our industry, let’s take a look at the flip side.
Making the Case for Data Integration
1. Having Access to Real-Time Data
If your goal is to eliminate the dreaded transactional friction within our industry, the best way to achieve that is to leverage a direct connection between distributor & supplier. The purpose of doing so is to eliminate the middleman and get the “freshest” available data. Case-in-point, checking inventory availability with an aggregator will not do you any good if the data that you’re querying against is “stale” or out-of-date.
If the aggregator is only pulling data from suppliers once or twice a day, your searches for inventory availability may not render accurate results. Similarly, if a supplier is not pushing data out to the aggregators on frequent enough basis, the searches that you perform will have a lower degree of accuracy regardless of whether its checking stock availability or trying to get the status and tracking information on an order. Bottom line here is that if you have the ability to connect directly with your trading partners, you should.
2. Simplified Item Management within an ERP or PIM
While smaller distributors will frequently leverage an aggregator to provide them with access to an item database of products transact upon, any company that utilizes their own feature-rich ERP and/or PIM understands that item data is the ‘center of the universe’ within these platforms. Furthermore, many larger organizations also have their preferred suppliers (sometimes as part of a buying group) frequently with their own special, contracted pricing.
The big challenge for these companies is the ongoing maintenance of their item data to ensure that pricing is kept up-to-date, that close-out items are flagged and discontinued items are removed as sellable product options. The fastest, easiest and most accurate way for a distributor to streamline the maintenance of item data is to get that data directly from the source: the supplier. Of course the best way to do that would be to leverage a direct API connection with their supplier partners.
Remember: You don’t have to choose one or the other
Over the years that I’ve worked in this industry, I’ve been a part of many discussions of the challenges and frustrations of exchanging electronic data. I’ve also heard of the challenges of having to work through business service providers that aggregate data to help enable our wonderfully creative yet frustratingly complex industry. My reason behind authoring this article is to highlight the benefits of both aggregation and integration. It is important to realize that these two different approaches do not have to be mutually exclusive. Both can be leveraged for their respective benefits and combine for a best-of-breed approach to doing business within the promo industry.
If you are a supplier or a distributor that leverages the NetSuite platform and would like some assistance in helping achieve a level of digital transformation, let’s have a conversation.
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