For Distributors, the Benefits of Supply Chain Modernization Are Huge

Today there are readily accessible digital solutions, enabled by artificial intelligence (AI) and advanced automation, that can radically transform wholesale distribution supply chains. Advanced software has been proven to streamline daily processes, make routine decisions, improve speed and efficiency, and intelligently balance cost with service.

According to SupplyChainBrain, AI can slash supply chain and logistics costs by 15% via process optimization. But many companies still rely on manual processes instead of leveraging AI and pursuing digital transformation. Wholesale distributors in particular often struggle to find the right balance between manual processes and automation.

Let’s face it, wholesale distributors have big, complex supply chains that might make the challenge of modernization seem overwhelming. But that only means the potential benefits are enormous. As wholesalers modernize and automate their logistics, the results cascade across every customer, every facility, every employee, every SKU, and every transportation asset. Modernization can truly be a game-changer and a significant competitive edge for wholesalers.

Recently our own Thomas Deakins, Executive Vice President of Alliances, talked with Christy Ament, Redwood’s Vice President of Customer Success, about the special supply chain challenges facing distributors, how modernization can help, and simple ways to get started.

Thomas Deakins (TD): Why is supply chain optimization so essential for wholesale distributors today?

Christy Ament (CA): Every supply chain is complex today, but distribution operations are especially challenging. Wholesale distributors are managing incredibly diverse inventories that might include hundreds of thousands of distinct SKUs. Customers’ delivery expectations are increasing—and the rise of omni-channel has only made it tougher to meet those demands, while still earning a profit. Labor is expensive, hard to find, and difficult to retain. Disruptions are becoming larger in scale and more frequent.

Think about the challenges distributors face every day in standardizing operations, optimizing service levels, right-sizing inventories, controlling costs, and maximizing efficiency. Manual processes and human analysis just can’t keep up with the pace and complexity of all those priorities—or make fast, optimal tradeoffs when they compete.

TD: How exactly can supply chain modernization help master these challenges?

CA: Modern supply chain solutions, such as transportation management systems and connectivity integrations, are purpose-built to master complexity. They ingest data, perform analysis, make recommendations, and even pull execution levers in seconds. Digital solutions provide real-time visibility and awareness across all the moving parts of the distribution supply chain. They resolve issues optimally and allow businesses to manage by exception. And that’s never been more important, given today’s supply and demand volatility.

Let’s say there’s a missed inbound delivery, or an inventory shortage. Suddenly critical customer promises can’t be fulfilled, orders can’t be picked, and trucks can’t be loaded. In the manual supply chain world, that disruption might not be noticed for hours. Employee tasks need to be shifted, customers need to be alerted, and a new source of product must be identified—and all those activities depend on human judgment, emails, phone calls, and manual work. A single disruption might take hours or even days to resolve, after a lot of waste, inefficiency, and relationship damage has already occurred.

In the modern digital world, an inventory disruption is logged in real time by connected software solutions—and immediately flagged across every affected function. Smart, AI-enabled optimization engines find inventory, re-assign tasks, and maximize delivery outcomes and costs—in just seconds. The supply chain becomes fast, smart, profitable, and automatically self-correcting. As we see our distribution customers modernize their supply chains, the benefits are huge. And the pressure is on every wholesale distributor to achieve this level of performance.

TD: Given the proven benefits, why are distributors lagging in modernization?

CA: The simple answer is that they don’t know where to start—and the scale of change can seem overwhelming. I think we all understand that mindset. Distributors are challenged just to get products out the door every day amid all the volatility we’re seeing. They’ve invested in legacy systems and standardized processes they don’t want to give up. They don’t want to rip and replace their tech stack, and they don’t want to disrupt the entire supply chain. But at some point, they need to realize that it’s approaching a “do or die” situation sooner than you’d think. Modernization isn’t optional, it’s becoming imperative.

TD: Based on your experience, what’s the best strategy to embrace modernization?

CA: At Redwood, we always advise customers to take a practical, incremental approach that delivers rapid value. Honestly, it is overwhelming to think about transforming today’s complex distribution supply chains. So we recommend starting with a single pain point and a specific goal. Maybe it’s increasing picking accuracy by 20% via advanced warehouse software and employee mobility. That’s a relatively small implementation that’s going to deliver big benefits. Customer service will improve. Labor costs will come down. Inventory accuracy and order tracking will improve. Employees will be happier. And, because younger employees like to use technology, it might be easier to attract and retain warehouse team members.

Once that initial pain point has been successfully addressed, you have momentum, proven results, and buy-in. Pick another initiative. Keep moving. There’s no need for a single, expensive, monolithic software implementation across the supply chain. Today’s digital solutions are modular, which means you can modernize at your own pace.

TD: Why is Redwood the right partner for distribution modernization?

CA: As a modern 4PL, we combine technical expertise with a deep understanding of the way distribution supply chains actually work. We’re backed by hundreds of customer success stories, including leading wholesale distributors. And we operate warehouses and transportation fleets of our own. We understand the real-world challenges distributors are facing, and we know how to drive practical performance improvements and fast returns.

Redwood also works with just about every leading logistics software provider, so we have no vested interest in a single solution or a pre-defined technology footprint. We help every customer determine the right solutions and the right modernization path, based on their unique challenges. And we can help accelerate software launches and system integrations with our in-house expertise and our proprietary solutions like RedwoodConnect™.

TD: If a distributor wants to explore modernization, what’s the first step?

CA: The best way to get started is Redwood’s fast, no-obligation Logistics Assessment. This unique service is designed to help customers understand their biggest opportunities and quick wins as they consider modernization. Our team will quickly develop a step-by-step, straightforward modernization road map with clear milestones and value projections. Contact our team, and let’s talk about how we can make supply chain modernization simple, cost-effective, and achievable, working together.