Oliver Wyman draws on unrivaled customer and strategic insights, state-of-the-art analytical techniques, and our unique commercial decision-support software platforms to help our clients succeed. We understand what it takes: an obsessive focus on attracting and serving customers, constant dedication to operational excellence, and a relentless drive to improve capabilities. It’s not enough to be good at something; you have to be good at everything, and excellent at the most important things.
We have a track record of helping clients win in this environment by creating real competitive advantage and driving significant growth. Our hands-on approach to making change happen and embedding powerful tools is unique – and over the last 25 years, Oliver Wyman has built our business by helping our clients build theirs.
The market landscape in wholesale and distribution businesses is highly dynamic. Customers are increasingly sophisticated, supply chains are increasingly global, and new digital startups threaten disruption. The winners in the next decade will develop compelling new services models, breakaway digital offerings, and innovative approaches to managing their networks and value chains.
Successful strategy in a distribution business starts with doing the work to understand the drivers of commercial success: Which customers are profitable today? How important is scale? We help our clients with approaches proven to lead to successful strategy development and execution.
Distribution businesses are especially hard to manage commercially. Decisions are made “on average” even though in many environments, de-averaged information is more important.
Ultimately, dozens of people with influence over key commercial decisions are all trying to do the right thing, yet the right thing can be counter-intuitive. And the stakes are high: Millions of dollars ride on choices made by relatively junior personnel. Ensuring overall strategy cascades down to individual product categories and equipping teams with the tools they need to make the right decisions can transform financial performance – without major investment in new IT platforms.
Building better and higher impact pricing mechanics requires a scientific approach to customer value, cost dynamics, and true profitability. Engaging the business, particularly the sales force, is crucial to achieve change, and building the right processes and tools will raise the odds of success. It’s hard work, but well worth the effort.
Many wholesalers and distributors operate on thin net margins, typically 3 to 5 percent, with revenues under constant pressure. Some companies have improved profitability by driving down spend on goods for resale while fostering critical vendor partnerships.
By adopting a pragmatic strategy that combines the best learnings from retailers and manufacturers, distributors and wholesalers can reap substantial value. Because goods for resale can account for 80 percent or more of a distributor’s cost base, using a more sophisticated approach to purchasing can help a typical distributor achieve 7 to 10 percent savings from cost-reduction programs, potentially doubling net profits.
In the age of the Intelligent Distributor, distributors need to be bold and agile with technology and must migrate from cumbersome legacy systems. Oliver Wyman brings IT strategy support capabilities as well as hands-on agile development via OW LABS to offer unique, tangible support for this transformation.