Digitization is our strategic commitment

The text was taken from the Instore portal.

In the last few years, we have witnessed great changes and increasing challenges in the consumer goods industry. One of the key ones is the increasing labor turnover caused by moving to other industries or going to work in other countries, which is facilitated by the opening of borders. Also, the inconsistency of prices of foreign suppliers in the region leads to increasing parallel imports, due to which certain types of goods can be obtained from different sources. Faced with increasing competition, suppliers are becoming more demanding. Furthermore, macroeconomic factors affect the growth of logistics costs, which reduces the scope for profitability that companies plan and want to achieve.

All that was mentioned above, along with a number of other challenges, prompts distributors to rapidly and continuously work on increasing efficiency, adopting new knowledge, and optimizing costs in order to be able to adapt to the greater demands of the industry and meet the needs of their clients, suppliers, and customers. One of the necessities in that process is the use of new technologies and new IT solutions.

Although Nelt has been investing in new technologies and process automation for years, today these investments are strategic priority number one, in order for the company to maintain and further strengthen its position as the leading distributor in the region. The focus is on increasing the efficiency of internal operations and creating the highest quality service for clients. In this way, at Nelt, we want to increase the satisfaction of existing clients, but also to create new values for the company. As much as 60% of the projects implemented in Nelt during the last five years included the implementation of new solutions in the field of digitization.

If we look at the distribution sector, there are several different areas where digitization can bring significant improvements:

• Processes between producers/clients and distributors
  • Improvement, automation, and digitization of key internal processes
  • Providing accurate and timely information/data to manufacturers/clients
• Processes between retailers and distributors
  • Improvement, automation and digitization of processes between customers and distributors with a focus on the current challenges they have in working with the distributor
  • Digitization of the cooperation model that will optimize the processes of both distributors and customers

Provision of accurate and timely information/data to manufacturers/clients and improvement and automation of internal processes

Nelt has long used technologies such as WMS – for warehouse operations management, TMS – for transportation management, inventory management software, ECM – for decision management, PDAs – for field sales, production management software, etc. We consider all of the above as the basis for survival and functioning in this industry, and in the next period, we will focus on more advanced solutions.

One of the most important future investments relates to the project of improved data management. We are the company that uses IT solutions for all business processes in distribution – from procurement of goods, logistics, transport, and sales, to positioning on the shelves, and a company that distributes dozens of brands to tens of thousands of delivery points. It is clear that we have a recorded history of all business activities and a huge amount of data. In modern terms, we are a “data rich company”. However, we want more than that. We want to use this data in a more optimal way and become a “data-driven company” – a company that manages data. Our goal is to optimize internal processes, make better and faster decisions based on valid and timely data, provide better service to our clients and increase employee satisfaction.

By establishing an enterprise data warehouse, with collected quality data from the already mentioned systems, as well as from other external sources, we will get a unique database and a single source of truth. This should provide us with the development of a strong reporting system with a greater degree of reporting automation and more time for report analysis. Real-time reporting, better communication among sectors and providing a wealth of useful information to our clients are additional improvements that the system provides. Thanks to advanced AI analytical techniques, machine learning, and complex forecasting models which make better forecasts based on available data, we will be in a position to better understand our clients and customers. We believe that Nelt, as a data-driven company, will be more capable and agile to adapt to market trends through faster business decision-making and faster response to changes in the business environment.

One of the trends in the consumer goods industry is the growth in the number of promotions in stores. Consumers are increasingly demanding when it comes to price, which is why promotions are one of the main tools of distributors, suppliers and retailers in the fight with the competition to win over customers. Investing in a tool for adequate promotion management, which will use our historical data and accurately validate the promo ROI for each of the promo activities is part of our strategic direction towards digitalization. That way, we will be able to better evaluate the results of previous activities, as well as plan future ones more adequately. This tool aims to help both Nelt and our suppliers to invest smarter in promotions that are more profitable and that consumers are more interested in. We also expect that this will bring benefit to our buyers, for whom we will provide promotions and help them to be more competitive by attracting more consumers.

Nelt is one of the pioneers in our region when it comes to PDA devices. Their use is part of our day-to-day life. As a logical continuation of better data management, one of the main projects in the coming period will be the launch of a more advanced version of the app for field sales. It will be linked to a central database and should provide field positions with real-time data, as well as the analysis of their customers. That will help them better understand their needs and thus increase customer satisfaction. On the other hand, all information from the field will be used, in real time, for analysis, decision-making, and reporting to our suppliers about the situation in the field. We will use the transition to a newer version of the app to automate all sales processes, reporting, reduce paperwork and administration, and increase efficiency and employee satisfaction.

Some of the trends that have not yet caught on in our market are “Mixed Reality” and “Image recognition”. While “Mixed Reality” using 3D models helps to better plan the distriution of goods on the shelves, without going to the store, “Image recognition” significantly improves and speeds up the work of shelf stockers by transmitting, with one click, data about the condition of the products on the shelves in the stores, instead of today’s manual input. These solutions aim at having the right products in the right place within the retail facility and to be available at the right time in order to avoid lack of stock on the shelf and consequently missing sales.

Improvement, automation and digitization of the process between buyers and a distributor, with a focus on the current challenges in working with the distributor

One of the key challenges for buyers and distributors is the delivery of goods, given the labor shortage that the entire industry is facing. Improvements in this area are of crucial importance for all stakeholders. One of the improvements within the delivery process is the digitization of delivery, which has been implemented by a couple of companies in the region, including Nelt. The goal of digitizing delivery is primarily to speed up the supply chain, i.e. to reduce the time spent on receiving goods and tracking documentation. The key benefits that buyers obtain are:

• elimination of corrective documents and a correct invoice (accurate documentation) during the first delivery
• delivery status available at any time
• access to the digital archive of documents, i.e. shipping documents

Another significant solution in this segment is the implementation of a B2B solution aimed at buyers. Currently, B2B solutions are not so represented in the FMCG industry and most players who are successful in other markets generally start from scratch, which is certainly not possible with existing distributors. Considering the current situation with parallel imports, the implementation of this solution will be a big challenge for all companies. A B2B solution in FMCG should focus on several areas within the cooperation of retailers and distributors. The key benefits are:

• the buyer’s ability to order goods 24/7
• all the necessary information about the products in one place, which the buyer can transmit to the end consumers
• availability of all documentation between distributors and retailers (invoices, corrective and other documents)

Digitization of the cooperation model that will optimize the processes of both distributors and customers

When we talk about the implementation of technologies in the processes between customers and distributors, we come to a new complexity: different systems that companies use as well as different digital strategies. The improvement of these processes is extremely complex and it must include, above all, the partnership of companies in order to optimize the process. One of the key improvements in these processes is the electronic data interchange (EDI), which refers to processes during ordering as well as processes during delivery/receipt of goods and invoicing. It is common knowledge that today all major retailers use their systems when ordering goods, which is, of course, also done by the distributors. This creates “double effort” for those working in the field (managers and salespeople) because one order is entered in two different systems. EDI optimizes this process because it allows information to be entered into only one system and then find its way to both. All other document exchanges are consequently automated. This improvement creates a benefit not only for the sales sector but also for the logistics and finance sectors.

Digitization within distribution, although quite developed, is still not widely applied. The reason is the large number of buyers/clients who have different needs. A fast and efficient implementation that will be focused on the needs of all involved stakeholders and that will include a long-term plan will allow companies to gain additional value compared to their competitors and will allow them to expand faster in the markets of the region.