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Analytics, Supply Chain Optimization and Customer Segmentation Distributors large and small are harnessing the power of analytics for competitive differentiation and strategic advantage, according to Facing the Forces of Change amounts of data available via their own enterprise (ERP), customer relationship management (CRM), warehouse management (WMS), and transportation management (TMS) systems, as well as numerous sources of external data. It is fair to say distributors, both large and small, are plunging into what is being called the era of Big Data, searching for competitive advantage in areas such as pricing, inventory, activity-based costing, supply chain, customer segmentation and compensation. By Guy Blissett, IBM Wh olesale Distr ibution Lead guy.blissett@ us.ibm .com ave four plus years really passed since the Dow dropped 777 points in a single day, housing starts dropped by a third, and Lehman Brothers filed for bankruptcy? And yet, entering 2013, many distributors are now faced with a new array of rapidly evolving opportunities and challenges. Distributors across all lines of trade are faced with acute pressures to drive greater operating efficiencies (e.g., do more with less), to differentiate their H 30 FEDA New s & View s26 New s & View s value proposition (e.g., do more of what really matters), and to deliver top-line growth. The dramatic entry of Amazon Supply into industrial distribution is but one example of how the forces of change are transforming wholesale distribution. As they formulate strategies to capitalize on these opportunities, leading distributors are increasingly leveraging their critical position in the supply chain to harness the power of data for insights and advantage. They are applying an array of analytical tools, methods and technologies to capture, store, analyze and communicate the increasing Analytics��� the new differentiator In Chapter 3 of the most recent Facing the Forces of Change��, I highlighted the need for distributors to embrace these powerful dynamics and to realize the potential of ��� differentiating with analytics.��� One of the key messages of the 2010 Facing the Forces of Change��, and a recurring theme of my research is that leading distributors are looking to data and the insights they can glean from it as a primary source of future competitive advantage. This represents a seismic shift in the wholesale distribution value proposition. While products, customer service, services and employees remain core to a distributor���s business, for many data and analytics will be the real sources of sustainable differentiation. Going forward, the effective application of analytics will enable distributors to deepen their customer insights, improve and accelerate decision making,identify and respond to market dynamics, and operate more efficiently. As a consequence, they will realign scarce resources against the more strategic and valuable customers and market opportunities, identify and reduce sources of inefficiency in their operations, and better capture all the continued on page 48