The world is changing faster than many of us care to admit—but wishing we lived in less interesting times won’t help you get ahead and stay on top. This is especially true for the manufacturers and wholesale distributors, whose industries were hit hard by a pandemic that forced everyone to rethink the way they do business.
A McKinsey article that came out two years into the pandemic highlighted the many upheavals that occurred since toilet paper disappeared from the shelves, including global conflicts that caused product-line closures, delays in transportation, and skyrocketing input costs. The article stressed the importance of building resiliency into our supply chains and processes, and today the world is even more chaotic and less predictable than ever.
The silver lining is that plenty of new technologies have emerged to help distributors and manufacturers transform their operations, integrating comprehensive software, robotics, machine learning, and big data solutions to help them adapt to a changing world and a competitive landscape.
In this article, we’ll explore the urgent need for digital transformation in distribution and manufacturing, along with case studies from companies that have used the latest tech to weather the storms of change.
Why Digital Transformation is Essential in 2025
The case for intelligent, thoughtful digital transformation has never been stronger. In the McKinsey article we referenced above, the firm predicts more craziness ahead. Due to upheavals in those supply-chain models that have worked seamlessly for decades, the report claims that “over the course of a decade, companies may face disruptions that erase half a year’s profits or more.”
Challenges you may face in 2025 include rising customer expectations, political uncertainty and unrest in both Ukraine and the Middle East, new tariffs on international goods, possible trade wars, and expanding conflicts.
Aside from living in a brave new world, there’s the simple matter of keeping up with the competition. According to a recent survey from Modern Distribution Management (MDM), 71% of distributors plan to increase their investments in new technology. Companies that fail to adapt will be at a serious disadvantage.
How New Digital Tools Can Boost Profits
There are many different ways to approach digital transformation, from comprehensive Machine Learning that analyzes data from your systems and Internet of Things (IoT) technology to software designed to streamline processes.
The beauty of digital transformation is that many products are designed to kill several birds with a single stone—connecting different systems, improving communication, and collecting data by interacting seamlessly with your Enterprise Resource Planning (ERP) platform.
A few of the benefits offered by digital transformation include:
- Streamlined processes and reduced manual labor
- Improved customer experience and retention
- Enhanced data visibility and decision-making
- Cost savings and increased operational efficiency
All this will provide a competitive advantage and allow wholesale distributors and manufacturers to eke out greater profit margins in competitive industries—assuming they act now!
Time is of the essence because, as we mentioned above, 71% of distributors are increasing their spending on digital transformation this year. By acting now, you’ll gain a powerful competitive advantage.
Not only can you improve profits, but you’ll also set yourself up to successfully handle future supply chain disruptions—just as Grainger and Caterpillar did during the COVID-19 pandemic. We’ll discover how they managed that in the next section.
Digital Transformation Success Stories
Digital transformation sounds great in theory, but it’s impossible to make a case for it without real-world examples of successful companies that have improved operational efficiency and survived supply chain disruptions.
What follows are two case studies of digital transformation initiatives that improved ROI for major companies—one manufacturer and one wholesale distributor.
Grainger Improves Inventory and Supply Chain Management
Grainger, a world-renowned industrial supplies and equipment provider, began collecting and mining the massive amounts of data generated by sales records and other sources. Prior to using the Internet of Things and ERP software to collect and analyze their own big data, they used historical sales and stock-out data to guide business decisions.
Grainger reports the following benefits from their digital transformation efforts:
- Better sales forecasting
- Real-time visibility across their supply chain
- Stronger inventory planning and development efforts
- Better order management
- Minimized shrinkage
Beginning the initiative just before the pandemic hit, Grainger has shown consistent growth over the past half-decade—expanding from $11.49B in total sales in 2020 to $16.93B by the end of 2024.
Caterpillar Takes Advantage of Big Data and Machine Learning
Caterpillar, the world’s leading manufacturer of construction and mining equipment, embarked on a digital transformation initiative back in 2016 that is still paying off today. In the first five years of the initiative, they more than doubled their network of connected assets, using IoT tech to create a competitive advantage.
Caterpillar’s networked devices allow them to monitor 1.5 million machine parts, schedule predictive maintenance, and manage equipment around the world. Additionally, they’re using big data to prioritize and recommend customer solutions that benefit their customers and boost sales.
One example of Caterpillar using big data to serve customers involved dilution detection for engine oil since dilution can destroy an engine or cause serious damage when unchecked. Using machine learning, Caterpillar cut one customer’s dilution detection time from 10 days down to 2.4 hours—saving them an estimated $360,000 in maintenance costs and keeping their projects on track.
This system, along with over 20 additional data sources, is helping Caterpillar better serve their customers, reduce churn, and maintain their dominance in the worldwide market.
Start with the Low-hanging Fruit: Returns Management
Digital transformation initiatives are often costly and take time, but there’s an area you can address quickly (at a very reasonable cost) that will put you ahead of your competitors. We’re talking about the way you manage returns.
B2B returns are a mess in every industry because distributors and manufacturers have to coordinate with one another, along with customers, finance departments, and other contacts within large organizations. Every B2B return becomes a project in itself, often managed by inefficient manual processes.
That’s why we created Continuum—a B2B returns management system built by industry experts who understand the challenges you face with reverse logistics. With different hubs for customers, warehouse employees, finance departments, and warranty claims, we’ve reinvented and streamlined the process of moving products back up the supply chain.
Book a personalized demo today and discover how Continuum can boost profits, reduce costs, and future-proof your business in 2025.
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