(Left - right) Boris Behringer, Ulrich Gutting, Katrin Schütz, Prof. Dr. Heiner Lasi with the Toolbox. Photo: © Uli Regenscheit

Making a Success out of Digital Transformation in Wholesaling

Toolbox developed by the Ferdinand Steinbeis Institute prepares wholesalers for the future

Digital transformation – it’s like a modern mantra. But before using digital technology, a company has to put good thought into future possibilities to add value – or value creation scenarios. To visualize existing capabilities and plan how to deal with future value creation scenarios, help has arrived in the form of a Toolbox that could be particularly useful for small and medium-sized wholesaling specialists. The solution was developed as part of a study initiated by the wholesaling association grosshandel-bw and funded by the Baden-Wuerttemberg Ministry of Economic Affairs, Labor, and Housing. The research was conducted by experts at the Ferdinand Steinbeis Institute (FSTI). The new Toolbox was put through its paces at an event called The Future of Wholesaling, which took place in Stuttgart at the end of May.

The Toolbox offers 60 wholesaling-specific “functional capabilities” for adding value. These capabilities were worked out during the research project by conducting partly standardized guided interviews with 13 wholesalers. These companies differ not only in terms of the size of their workforce and sales revenues, but also sectors of industry. They ranged from producers of mechanical fittings and metal parts to pharmaceutical companies and book manufacturers. The Toolbox goes through nine steps, graphing the current situation a company finds itself in and highlighting potential new value creation scenarios. These scenarios are based partly on capabilities already possessed by the company, partly on new capabilities. By pooling the capabilities of different businesses, the Toolbox can help firms find different partners for forming value creation networks.

 

Planning and designing a value creation network using the Toolbox

 

Adding value for users and business partners

For Prof. Dr. Heiner Lasi and Patrick Weber, experts at the Ferdinand-Steinbeis-Institute (which belongs to the Steinbeis Foundation), the event at the Mercedes-Benz Arena in Stuttgart was an ideal opportunity to present the practical uses of the Toolbox: “It’s about considering which value-added can be created in the future, for users and partners. Technologies like online platforms are just enablers, so you don’t need to look for the right technology until you get to the second step,” says Lasi, summarizing the key message for the audience.

To bring the practical uses of the Toolbox to life for the audience, Peter Meißner, managing director of the fittings manufacturer Koch, presented the first live example of the day: the transformation of a value creation scenario. Meißner conducted a conversation with Alexander Neff (FSTI) and Heiner Lasi to explain the current situation faced by his company, also outlining how the existing value creation scenario can be extended by adding certain capabilities and creating a new, customer-centric value creation scenario.

A second practical example was provided by Dr. Daniel Werth, managing director of Beyerbach, who gave a number of insights into the transformation of his company. Beyerbach’s journey took it from being a specialist restaurant and catering wholesaler to becoming a provider of solutions for supermarket concepts. A key aspect for both Werth and Meißner was that after the transformation process, the emphasis of existing capabilities had shifted: They have now been complemented or substituted by digital solutions.

A panel discussion moderated by Boris Behringer (chief executive of grosshandel-bw), Rainer Janz (departmental manager of product and quality management at Hermann Bantleon), and Peter Wittmann (project manager at the Steinbeis Digital Business Consortium/SDBC) looked at the third example of the day and discussed value creation networks. Their example: the wholesaling Micro Testbed (also sponsored by the same ministry), this time focusing on cooling lubricants made by Bantleon. A new sensor has been introduced to production for measuring cooling lubricant attributes. This system automatically uploads data to a “smart shop floor” browser application programmed by an IT company. The idea is to continually monitor the condition of emulsions, independent of specific location. Involving a further business partner in the value creation network resulted in a device being fitted on machinery to clean emulsions. Although the cooling lubricant does not need to be replaced as often as it used to be – meaning lower sales for Bantleon – the company can leverage the benefits of its network with the Micro Testbed participants by offering new services. Digital technology thus adds a certain degree of stability to the firm’s processes in terms of adding value.

The Toolbox and the Micro Testbed model both support businesses in planning and designing new value creation scenarios for the future. The next step will now be to use digital technology as a key to successfully implementing the new value creation scenarios.

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The wholesaling study

Between June 2018 and May 2019, the FSTI conducted a study on digital technology in the wholesaling industry in the state of Baden-Wuerttemberg on behalf of the Ministry of Economic Affairs, Labour, and Housing and the wholesaling association grosshandel-bw. Whereas manufacturing is already making good use of digital solutions to pick and pack goods for its online customers, and websites such as Amazon are offering customers a variety of new services, the wholesaling industry is falling further and further behind in its traditional role as a trading intermediary. For the study, the FSTI interviewed 13 wholesalers in Baden-Wuerttemberg, spanning a variety of sectors of industry. It soon became clear that it would not be possible to conduct a survey across all sectors and that the research would need to be kept more abstract due to the huge differences in the types of products being traded (and this would also have had an impact on the research methodology). As a result, the interviews focused on ascertaining the business capabilities of the individual firms and how these mark them out as wholesaling companies. The next step was to evaluate the findings of the interviews, which had involved numerous experts. The aim was to ascertain which of the capabilities already possessed by the individual wholesalers would make it possible to add value as part of a cross-industry value creation network (such as a Micro Testbed). This would also make it possible to define the potential roles that could be played by the individual wholesalers in a digital value network, and although these roles would be based on existing capabilities, they would not necessarily be dictated by the kind of goods currently sold by the companies.


Using the Toolbox

To analyze companies’ value creation scenarios, the Toolbox guides them through nine steps:

  1. Definition of the value creation scenario; status quo
  2. Assessment of existing capabilities; status quo
  3. Formulation of value creation scenarios; future options
  4. Classification of existing capabilities for value creation scenarios; future options
  5. Selection of further capabilities for value creation scenarios; future options
  6. Checking whether capabilities will be needed after shifting emphasis
  7. Defining business partners
  8. Matching partners with capabilities
  9. Optional reduction of no-longer-needed capabilities

Steps seven, eight, and nine are optional when generating additional value in networks. To find out more about the Toolbox, go to the FSTI website.


The wholesaling Micro

Testbed Backed by the Baden-Wuerttemberg Ministry of Economic Affairs, Labor, and Housing, the focus of this testbed lies in the wholesaling of cooling lubricants. Running regular checks on cooling lubricants, cleaning them, and (if necessary) completely replacing them, can help clients (manufacturing companies) reduce machine idle times and thus save money. This was the starting point for the Micro Testbed. The participants agreed that they would offer a shared, platform-based, single-source solution that should encompass the delivery of a suitable emulsion, regular checks (using different measurement techniques provided by the individual Micro Testbed participants), clearly presented data (on measurements, using a dashboard), and environmentally friendly disposal of the cooling lubricant.


 

 

Contact

Alexander Neff (author)
Research Assistant
Ferdinand Steinbeis Institute (FSTI) (Stuttgart)
www.steinbeis-fsti.de

Patrick Weber
Research Assistant
Ferdinand Steinbeis Institute (FSTI) (Stuttgart)
www.steinbeis-fsti.de