Distributors should not only be seen as development partners. They also help to cushion fluctuations in the supply chain. What inventory management services do you offer your customers and suppliers?

Thomas Reichmann: As a distributor, we offer customer-specific stocks and procurement for suppliers and customers, i.e. scheduling and storing goods. We also run consignment warehouses from which customers can obtain supplies directly. The topic of value-added service must also be considered in this context, as we also take care of shipping with supplier or customer labels. Based on detailed delivery schedules and with the help of SAP, we supply our customers in a reasonably timed manner and, depending on current demand, directly to production. We are constantly developing our capabilities with regard to SAP and other services, as we are aware that a pure buy & sell distributor is unlikely to survive in the coming years. We are therefore developing in the direction of a service provider that offers design support as well as product and material customization in addition to stockholding. The aim is clearly to increase customer benefit.

An SME has a project, is looking for a partner and approaches you. What happens next?

Thomas Reichmann is a management consultant and Senior Project Manager & Process Manager SAP at Schukat.

© Schukat

Reichmann: It is important for us to recognize the long-term nature of the partnership, because only then can we fully exploit our capabilities in terms of support, design-in, packaging and so on, and develop solutions together. In this context, we often talk about drop shipping.
The other major area, fulfillment, is basically hidden. This means that we no longer act as a distributor, but rather as a logistics service provider in the supply chain. Basically, we give manufacturers from all over the world who do not have their own distribution structure on the European market the freedom to act locally.

In the sense of shipping services like DHL or as a platform provider like Amazon?

Reichmann: We will never be a pure logistics service provider like DHL or Amazon, which is also strong in this area thanks to its own delivery service. But we do offer logistics services such as shipping, warehousing and so on specifically for certain suppliers and customers. The pandemic has made it very clear where our added value lies: We can build buffers. We are in such a strong financial position that we have stocks that others don't want to have in stock due to their reach. That is precisely our core business: ensuring security in the supply chain. But that doesn't stop us from developing skills to meet customer-specific needs. And I first have to put myself in a position to do this by building up further skills - including in design-in, packaging and product customization.

There are companies that have little or no storage capacity of their own. What role do you play here?

Reichmann: In these cases, our function is to hold stocks in the supply chain. We offer storage capacities and, depending on the situation, we can offer stockpiling for three to 12 months. This ensures security in the supply chain. We have the logistical and technical ability to separate stocks very cleanly. In this way, we ensure that the relevant products do not go out to anyone and that delivery deadlines are maintained.

Do you offer the same for suppliers and manufacturers?

Reichmann: We want to expand our portfolio further, which is why we are currently working intensively on our Product Information Management System. The aim is to create capacity and ensure administration. We are also continuing to expand our e-commerce so that we can not only reflect 40,000 to 45,000 products, but also a seven-digit number. If a supplier then offers to include their entire portfolio, we will be in a position to do so. Of course, this always involves opportunities and risks that have to be weighed up individually.

From value-added services to platform business

Schukat put its fully automated warehouse into operation almost three years ago. What advantages does this offer customers and suppliers?

Reichmann: For our customers, we have been able to significantly reduce cut-off times. This means that the processing time for orders has been significantly reduced: An order from entry to dispatch usually takes less than two hours - depending on the items, of course. The fully automated warehouse gives us the flexibility to cover all value-added services and to expand them even further. Redundancy and security were also important in the planning: if one system fails, another one takes over. The warehouse is also scalable; we are able to add or remove shuttles, add shelves and adapt the compartment grid to the size of the materials to be stored. This allows us to adapt very quickly to any scenario.

You mentioned Value Added Services several times. What do you mean by this in the context of warehousing and logistics?

Reichmann: Especially in the area of fulfillment, we can quickly get to value-added services. In drop shipment business in particular, it's about 'disguising' ourselves as a logistics service provider, for example by applying customer-specific labels, using a specific parcel tape and so on. I also need to be able to map this in the processes.

As a shipping service provider for the customer, so to speak?

Reichmann: We are not a pure logistics service provider, nor do we want to be; we offer a platform. It's about looking at the supply chain as a whole: If we have the goods that a customer wants to send to their customer in stock and are closer to them, why shouldn't we handle the shipping? It's faster and more sustainable and the result is the same. It's about offering strategic added value - for our customers, but also for our customers' customers.

Can you elaborate on the platform concept?

Reichmann: Our task is to develop an understanding of the platform business. To understand what role we can play in an environment in which Amazon and other major players help define the supply chain to a certain extent. They don't care whether they deal in books or semiconductors. So how can we, as small and medium-sized distributors, position ourselves in this spider's web of supply? Where can we create added value? Where are we relevant in the supply chain? We can bring added value to our customers by building up expertise and offering a platform to network with our own customers and suppliers. This is why we are investing in IT and data exchange technologies: we need to connect customers and suppliers in a cost-effective way to simplify and accelerate the exchange of information so that our employees and our systems can respond faster and better. This is our approach: to play and exploit the technical capabilities and systems we have. This applies to IT as well as our fully automated warehouse.

Which interfaces do you use to connect suppliers and customers?

Reichmann: We rely on SAP and the standardized connections via EDI and ARIBA, simply because we can always be sure of finding a solution.

What role do you play as a distributor in times of material shortages and difficulties in the supply chain?

Reichmann : Our procurement channels are more developed and we can use them much better as a result. We are closer to the manufacturer and therefore notice much more quickly when irregularities occur or may occur. Secondly, due to the longevity of our partnership, we can of course talk to our suppliers in a completely different way to ensure that we are supplied. And thirdly, if we find out that something is up, we increase our stocks. This was also our advantage during the coronavirus pandemic: we had full stocks! Even during the pandemic, we managed to keep availability high. However, this is only possible thanks to long-standing, solid and sensibly maintained partnerships with many suppliers and manufacturers. This is also our task for the future: as a supply spider in the network, to maintain the partnerships in the long term in order to further focus the benefits.