Big productivity gains in the U.S. wholesale distribution industry have largely been due to rising commodity prices. But that situation can't last, according to a new study sponsored by Lawson Software and conducted by Pembroke Consulting. Future growth must come from bigger investments in information technology, Lawson said. Such a trend would, of course, benefit software vendor Lawson, which counts the wholesale distribution business as one of its biggest markets. Still, the Lawson study insists that companies must acquire new analytical tools for parsing customer-level data. The report includes a survey in which it finds that more than 70 percent of distribution executives targeting new customers for growth are looking within their existing geographic markets. In other words, they can only win new business at the expense of an existing vendor. And competing for that business purely on the basis of price will result in lower gross margins. IT systems can help, by providing integrated views of accounts, says Adam J. Fein, president of Pembroke. In the process, companies can discover which are the most and least profitable customers. New IT systems can also help companies to manage acquisitions properly, the study says.
