MDM Profitability Summit 2023: How Generative AI Can Help Distributors Boost Their Bottom Line

Enavate recently delivered a 20-minute session at MDM’s 2023 Virtual Profitability Summit. This post covers what we talked about during our session. If you’d like to tune in, check out the video below.  

Artificial intelligence (AI) has been around for a while—IBM’s Deep Blue became the first machine to beat a reigning chess world champion way back in 1996. But it has only recently become a widely accessible technology with a range of practical applications.  

What’s the reason for this sudden shift? Well, before 2023, AI was primarily cognitive, which required specialized technology, esoteric knowledge and a whole lot of money to develop. Cognitive AI models were customized to the problem they were meant to solve; Deep Blue was specifically designed to play chess at a world-class level.  

The AI field’s “rocket scientists” spent decades conducting arduous research, eventually leading to the development of generative AI: general purpose large language models (LLMs) that are pre-trained on truly massive amounts of data, with some LLMs approaching one trillion parameters. Now, companies don’t need to invest large amounts of time, effort and money to train AI models for their specific purposes. Instead, they can use these existing generative models across disciplines, domains and applications. In other words, generative AI is AI for everyone, including manufacturers and distributors. 

Getting Generative AI to Work for You 

It’s easy to get a generative AI program like ChatGPT to start working for you. First, give it a persona that makes sense for the task you want to perform, such as “logistics planning manager.” This creates a specific context for the AI to operate within. Then, either give it data/additional context or ask it to find some for you. From there, you can ask it questions that will help you drill down and find specific solutions.

How Can Generative AI Help Manufacturers and Distributors with Today’s Challenges? 

The results of generative AI are impressive, but with the information overload that we are experiencing, it’s difficult for industries like manufacturing and distribution to identify their biggest hurdles and how generative AI can assist in clearing them.

MDM recently conducted a membership survey that asked about the factors that are having the biggest negative impact on profitability today. Here are the results:

MDM found that the biggest reason distributors struggle with profitability is that competitors go low on price to win orders. Then there are supply chain issues, which are tied to almost every challenge distributors face. Generative AI can help in both of those areas.  

Value-based pricing differentiation 

AI-powered tools can analyze data such as purchase history to identify and segment customers based on their preferences, behavioral patterns, and most importantly, perceived value. These tools could even go a step further and analyze customer reviews, social media sentiment, and other feedback data to define those segments even more. Then, you can use differentiating value drivers to set specific pricing strategies and adjust prices in real time based on fluctuating market conditions. As a result, you can optimize revenue and capture real value. 

Competitive pricing 

AI can also help you find the optimal prices to stay competitive in the marketplace. With AI-powered tools automatically gathering and analyzing pricing data from competitor websites, catalogs and other sources, you can monitor your rivals’ pricing strategies and identify patterns. This can help you find opportunities to beat your competitors on price and win back orders.

Stabilizing your supply chain 

If the last few years have taught distributors anything, it’s that you can never have total control over your supply chain. However, you can stabilize it, and AI can help. AI tools can analyze real-time data such as market conditions, customer demand and supplier performance to provide actionable insight and help you make informed decisions in a prompt manner.

AI tools can also help assess various risks along the supply chain, such as geopolitical instability and natural disasters. It’s tough for humans like us to stay on top of every single variable, but AI can continually monitor them all and flag areas that need attention before things get out of hand.

Generative AI Integration in Microsoft Dynamics 365  

Microsoft is already on the verge of unlocking the power of AI for distributors. Their next planned release features Copilot, monitoring supply chain disruption within Microsoft Supply Chain Center, which is available to Dynamics 365 Supply Chain Management (SCM) customers, as explained in the video below.

Reserve Your Free Whiteboard Session With Enavate 

If you’re interested in using Microsoft Dynamics 365’s AI integration for your business, we can help.  Sign up for a free business transformation assessment to get personalized advice from our Cloud, ERP and Industry experts. We’ll work with you to create a business transformation roadmap, identifying and removing any obstacles in your way.