Slo Ru

Digital strategy


Development of a digital strategy. 


The Company that became our customer was engaged in the distribution of industrial goods and spare parts in several countries for many years. The Company’s unique competitive advantage was the wide range of products. The Company purchased products from many manufacturers and sold them to small customers. At the same time, small customers valued the Company, because it was the single access point for purchasing different products from various manufacturers. 


However, tough competition led to a significant reduction in the Company’s marginal profit, while the costs necessary to maintain the stock were still high. On the one hand, the Company’s competitors were small regional businesses that could not offer such low prices, but they were much more flexible and client-oriented. In addition, more specialized competitors appeared in the market. They could not boast such a wide product range, but they had numerous advantages in their narrow niches, and this was important for many consumers. Managers of the competitors were better versed in their few products and provided customers with more professional advice, which is an important success factor in this market. 


At the same time, the management of the Company expressed concerns about too slow deployment of digital technology. The Company implemented CRM and WSM to optimize some processes, but the overall rate of digital transformation was considered insufficient.


The results of the analysis showed that the actual situation was even worse than the Company’s management imagined. Some customers began to buy products directly from manufacturers. This was due to the fact that many plants began to offer more convenient websites, and the logistics system in the country was well-developed. Many plants were more willing to ship products in small batches, although they had never done so before. 


Buyers that were interviewed reported that they do not always understand why they should purchase products from our customer. More and more products were sold via the Internet, that is, buyers could quickly obtain up-to-date information on prices and availability of goods from various suppliers, and place an order where it was more convenient and cheaper. Our customer became just one of several possible suppliers, but not the preferred one.


The same survey of buyers showed that the following aspects are the most important for them:


  1. Professional advice from the supplier’s staff. There were many products that were interchangeable to some extent. In addition, all manufacturers regularly brought new products to the market. Buyers often had difficulty in choosing, because they did not always have time to understand the specifics of each of the new proposals. 
  2. Quick and convenient placement of orders. 
  3. The supplier should ensure the immediate availability or at least the possibility of a quick delivery so that the buyer does not have to make large stocks.


Taking this into account, we prepared a development strategy for the Company, in particular with regard to the introduction of digital technology. Providers of professional services, suppliers of goods and software developers helped us do this work, but we formulated all the requirements for the systems ourselves.


As part of the strategic session with a numerous working group consisting of executives and employees of the Company, we first identified the main problems of the Company that overlap with the most important requirements of its customers. The final list was as follows:


  1. The Company is forced to maintain too large inventory in order to ensure fast execution of customer orders. Computer algorithms should help increase the availability of goods and simultaneously reduce inventory to a reasonable minimum.
  2. Large investments in inventory are unnecessary costs. By reducing inventory, the Company will be able to reduce prices for its products without losing profitability.
  3. Interfaces of the website and all other points of contact between the consumer and the Company should be carefully redesigned for the purpose of simplification and to become more user-friendly. The Company may offer its largest customers to integrate their inventory management systems with the Company’s software, so that after a specific part is written off from the customer’s stock, the Company will immediately receive an order for the same part.
  4. Sales representatives and support staff of the Company had to get a new CRM providing the ability to quickly retrieve technical information about the parts using any device, including PCs, tablets or even smartphones.
  5. Supply chains of the Company should be optimized. At least 35% of trucks that left the Company’s warehouse were only partially loaded; in addition, they were forced to travel along suboptimal routes, which led to additional costs and did not allow the Company to reduce prices for its products.


It took the Company almost two years to implement the first stage of the project. Today the second stage of system implementation is underway. The Company’s IT Department should solve an impressive task—to create a single product based on CRM, TMS, WMS, CMS, etc. And they successfully cope with such an ambitious task.


An even more difficult problem was the restructuring of the Company’s internal processes in such a way that all these software products were not simply used, but also benefited the business. We visualized the flow of goods from order placement to receipt of the goods by the end-consumer, as well as the information flow that accompanies such movement of the goods. We solved this task using the mapping workflow methodology. Representatives of numerous departments and divisions of the Company have contributed to this work. During the implementation of the planned work, it was found out that all previous improvement attempts were unsuccessful because the Company worked on individual sites without having a general picture and without an understanding of the aspects that were actually valuable for the customer. Successful changes became possible only when such a value was established, and the flow of creating such a value was described and visualized.


Today, the Company confidently regains its leadership positions in the former markets and struggles with competitors that until recently seemed invincible. All employees of the Company now have a common understanding of the purpose and the value, which allows them to continually improve existing processes, making the Company’s product (product + services for availability, delivery and technical support) increasingly attractive to consumers.

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