This post is sponsored by SAP.
Wholesale distribution is undergoing a substantial transformation driven by protectionist policies, geopolitical tensions and climate volatility, compelling midmarket distributors to adopt digital transformation to maintain a level playing field. The age-old model is no longer working. Traditional distributors have been forced to choose between being low-cost volume leaders or adding high-value services to their offerings.
Nowadays, effective distribution requires a comprehensive overhaul of operating service models, with a focus on investing in people, data, and technologies. A SAP research study found that 54.8% of midmarket companies are embracing new technology, and 53.3% feel that adopting AI is a high priority. At the same time, the survey reveals that growth opportunities can be hindered by the fact that 32% of employees are resistant to change.
Mastering this technology divide requires implementing new service models to deliver next-generation customer experiences. Successful distributors will integrate human judgment with AI analysis to generate value, focusing on enhancing the employee experience to accelerate operations, minimize friction and foster new opportunities for revenue growth. A unified, intelligent platform can bridge the gap between human judgment and AI speed. Working with the right solutions partner is essential to achieve it.
“Unifying processes on a single standardized platform using solutions from SAP has enabled greater collaboration across the organization as well as facilitated smoother partner interactions,” shared one SAP Wholesale Distribution customer.
More than 24,700 wholesale distributors in 133 countries utilize SAP solutions to increase their supply chain resilience, and for good reason. SAP Cloud ERP includes embedded AI technology that supports a wide range of critical functions including inventory optimization, sales and operations planning, and demand forecasting, that unifies processes and data in real time. But all areas of the business are rich with opportunities that can benefit from integrated business AI, including:
Partnering beyond procurement with AI-powered data
SAP reports show 74% of Fortune 500 wholesale distributors utilize its services, benefiting from a modern cloud solution based on industry best practices. SAP Business Suite fosters innovation by integrating core business applications, data and AI capabilities that can be adapted to meet the needs of growth and changing economies.
In today’s market, wholesalers must think broadly to move beyond managing supplier risk and also manage supplier value. Using SAP empowers distributors to transition from buyers and resellers to data partners through better forecasting, production planning and real-time insights for informed decision-making.
Take, for example, Dis-Chem, a pharmaceutical company, leveraged SAP solutions for various functions, including warehouse system housekeeping and technical support, to enhance warehouse operations management. This integrated approach automated tasks, boosted output, aligned with customer expectations and improved overall efficiency.
Technology as a talent accelerator
The narrative around digital transformation has too often focused on displacement rather than empowerment. In reality, intelligent technology – particularly when powered by AI – can be a powerful catalyst for workforce development and operational excellence. Facing persistent talent challenges – from attracting skilled workers to quickly onboarding new hires – forward-thinking distributors are leveraging SAP’s integrated AI solutions to make every employee more effective.
For example, SAP SuccessFactors Onboarding, enhanced by AI agents and Joule, the SAP AI copilot, compresses the time-to-productivity for new employees. New hires can instantly get contextual guidance, recommended training and answers to complex, job-specific questions via natural language. This direct access to information frees up experienced staff from answering repetitive questions, allowing them to focus on high-value activities, such as complex problem-solving and building customer relationships.
Beyond onboarding, AI agents embedded in SAP’s talent solutions address the full employee life cycle, which is critical for retaining specialized roles in distribution. SAP SuccessFactors Opportunity Marketplace utilizes AI to proactively match existing employees with internal projects, mentorships, and lateral moves based on skills and career aspirations, thereby mitigating the risk of key staff, such as warehouse managers, leaving for advancement opportunities.
Furthermore, AI-powered skills inference automatically identifies hidden expertise demonstrated on the job, not just formal credentials. For workforce planning, AI agents analyze historical and seasonal trends to accurately predict staffing needs across multiple distribution centers, enabling proactive recruiting. The result is measurable improvements in retention, productivity, and employee satisfaction, allowing experienced staff to focus on the high-judgment activities that differentiate the business.
Service model transformation through AI
Wholesalers also have to contend with evolving customer expectations and the need for more personalized experiences. This shift in buyer expectations can be attributed to a new generation of buyers. In particular, the entry of Generation Z into the workforce is influencing B2B expectations, with a demand for real-time inventory visibility, self-service ordering and fast delivery, emphasizing the need for an omnichannel customer experience, as noted by Marie-Anne Bailey in The Future of Commerce.
This service model transformation provides wholesalers the opportunity to launch new, non-product-based service models tailored to a new wave of buyers, opening new streams of recurring revenue. As expectations change and consumers demand more, moving forward with new services powered by AI is a necessity; SAP can help bring it all together.
Lay the foundation for successful change
The challenge is not just technology adoption, but change management. To move forward, wholesalers need to ensure that their data is AI-ready. The effectiveness of large language models depends on the quality of the input data, necessitating that the data be consolidated, clean and robust. SAP Cloud ERP, along with its evolving cloud and AI capabilities, enables midmarket distributors to gain real-time visibility into their operations in several ways.
Of course, getting data AI-ready is only half the foundation. Scalability is critical for midmarket wholesalers, and its importance is heightened by current business realities. Through unified data, cloud access and AI-driven insights, SAP tools empower mid-market distributors with real-time visibility, enhancing inventory management, fulfillment speed, customer service and agility to gain a competitive advantage.
Realize benefits today and get ahead tomorrow
SAP Cloud ERP unifies business processes across departments, delivers embedded AI capabilities that boost productivity from day one, and builds a data foundation to fuel innovation from business models to better insights.
SAP solution benefits include:
- Centralized data and real-time analytics
- Cloud deployment for flexibility and scale growth
- Embedded AI and machine learning capabilities
- Enhanced collaboration and supply chain transparency
- Proactive exception management allows for focus on critical tasks
- Out-of-the-box industry analytics tailored for distribution
Download the white paper or speak with an SAP solutions expert to discover how SAP is the ideal partner to help wholesale distribution companies of all sizes grow, optimize, and scale operations. Then watch the on-demand webinar, “The Distributor’s Journey, Graybar’s Strategic Transformation Through Technology”, featuring SAP in conversation with Graybar executives.”