Andrew Walker - Digital transformation in manufacturing and distribution
Andrew Walker is the CEO of Shift7, a leading B2B digital agency for manufacturers and distributors.
In this episode, we explore how manufacturing and distribution are embracing digital transformation. We discuss the most important trends, the differences between B2C and B2B, and the need to focus on the customer experience. Andrew closes with an example of how a toy manufacturing client of theirs was able to embrace digital transformation as part of their corporate transformation.
Links & mentions:
“The biggest trend I've seen is just C-level executives at B2B companies choosing to go forward with investment, with the decision to change how they're doing sales models. And that's exciting, and that's the core part of our business, is helping with that transformation.”
Welcome to the Agile Digital Transformation podcast, where we explore different aspects of digital transformation and digital experience with your host, Tim Butara, content and community manager at Agiledrop.
Tim Butara: Hello, everyone. Thanks for tuning in. Our guest today is Andrew Walker, CEO of Shift7, a leading digital agency for manufacturers and distributors. In this episode, we'll explore the topic of digital transformation in manufacturing and distribution, and complete that with the best practices for digitalization and digital strategy in these areas. Welcome, Andrew. It's great having you with us on the show today. Anything to add before we begin?
Andrew Walker: I'm just very glad to be here and always appreciative of others taking the time to talk to us about the front office digital transformation and B2B companies. It's a topic that is our singular and exclusive focus, so it's very near and dear to us, but it's glad to see that it's getting, definitely the last three or four years, more traction, and your interest is part of it. So thank you.
Tim Butara: Awesome. Yeah. You're definitely the right person to talk to about this, then. So let's kick things off with the number one question, which is, what have you seen to be the biggest trend or the biggest impact of the ongoing digital transformation on the fields of manufacturing and distribution?
Andrew Walker: Yeah, we have a phrase within our company. We call it the KISS method. KISS – keep it simple, shifter. And so I'll keep my answer simple, because it is – the biggest trend is a simple one, and that is simply the desire and the initiative to go and to get started by these B2B organizations.
Many of these manufacturers, CPG and distribution companies have had the same sales model for decades. Often they were originating in the 80s or 90s. They were sales models just for refresher that were largely driven by in-person relationships, in-person sales maybe have gravitated towards catalog sales models and or using fax or even, frankly, taking pictures of an order sheet on a piece of paper and emailing it in. While that sounds that is digital, that's still a little old school and archaic.
And so the biggest shift in trend is just the fact that these organizations that have watched financial services, retail, hospitality, all these companies move to a more digital customer experience in the 90s, in the 2000s. It’s 2022, and they're just now on what we like to call generation 1.0 of digital transformation. And that's okay. A variety of things have helped to get see that trend there, and we could talk about that today.
But the biggest trend I'm seeing is just C-level executives at B2B companies choosing to go forward with investment with the decision to change how they're doing sales models. And that's exciting. And that's the core part of our business is helping with that transformation.
Tim Butara: I think the key point here is the transition to new sales models. Right. Because I think that if you took new elements and introduced them into the old sales models, which obviously have proven to be not as effective in the current age, there would be a lot of misalignment, I think. You could get lucky and succeed with that. But chances are much higher that you'll need a new sales model to make the best use of all the new trends and all the new tools, and basically the shift in mindset. You mentioned that it's the C-level executives that need to drive this mindset shift.
Andrew Walker: Yeah, there's a combination of things, if I may. One is, there is a generational change. So the salespersons that were in their twenties and thirties in the 90s are now older, perhaps even retiring or moving to retirement. So these B2B organizations need to think about different sales methods, either new individuals or new ways to do it.
So there's a new generation that wants to interact and even conduct sales themselves, if it is a human being, in a much more online way. Both themselves, they don't want to carry out a catalog. They want to be able to email a product listing page to a potential client or customer. They don't want to make a call to the back office to see if there's an inventory of 5000 pieces. They want to be able to look it up on their phone to see, is there inventory for 5000 pieces?
And that's just the sales folks; on the customer side, we all want to see, is the product available now? Can they ship it today or today? Can I see some specs on it? Can I see a video image? Can I turn it around 360? Can I see how it maybe is used in a situation or a project? I don't want to call someone about that necessarily. I don't want to read a manual necessarily. I want to have it my way. And I think that's on the customer side.
So there's a lot of different forces that are changing, as you said, the sales model, and I'd be lying to you if I told you that the last two years of the pandemic has not accelerated massively those desires, not just within B2B, but other industries and sectors. Obviously our own personal lives have changed, but in the B2B world, it has really helped accelerate it in a major way.
Tim Butara: And how are brands adapting to this acceleration and to all the new trends that are brought about with it?
Andrew Walker: Well, I guess the first thing I would say is, they're really not new trends. They're not new trends to you and me. And frankly, most of these B2B organizations and the leaders, they use Uber and they use Amazon and they use Yelp and DoorDash and they have their groceries delivered. So they’re, in their personal lives, they're not a new trend to them. It's a new trend, I guess you might call it, to the organization, how they operate.
But to your question on how are they adapting, it is a bit confusing. It is a bit confusing. The reason why I say it's a bit confusing, and confusing may not be the perfect word, is that these organizations are not as educated and knowledgeable and smart as they think they need to be, which is true. There's probably a bit of naivete or embarrassment around the lack of knowledge of how these modern 2022 tools, technologies, platforms can help their sales models be effective in marketing and ecommerce, et cetera. And so they know the nouns, they know the buzzwords, they know the phrases, but there's a lack of depth of true understanding.
And if you were to go to a chief marketing officer of an online grocer or a CIO of a retail organization, whether it's here in the US or in Europe, they would be sophisticated on the tools and the technologies and the features and the functionality. And the way it's impacted these groups is they don't have that basis of understanding. And so there's a lot of learning. And my company, we do a lot of, while we're selling, we do a lot of educating. We're educating, educating, educating on how this will work and what does this mean. And so that is a big impact, to your question around these organizations. So we like to call it they're drinking from the firehose, they're taking a lot and really fast.
Tim Butara: We did establish previously that the mindset shift is one of the key elements in companies being able to take advantage of all these new trends and new tools and the changes, basically. And how else can they reach that mindset shift if they don't have any education, if they don't have any learning, if they don't have any training? So I think that what you're doing at Shift7 is definitely the right way to go about it.
Andrew Walker: Yeah, great question. If you're watching this and listening to you and I talk about this transformation shift, what can you do as an executive at a manufacturer or a distributor? Great question. Obviously you can Google things, you can read articles, et cetera, you can tap into your board members, etc. But the best thing you can do is to hire an executive. We call them chief digital officers. They're becoming more and more commonplace. It's an expensive hire, it's a talented individual. Often they come from non B2B industries because they've done this before in retail, financial services, et cetera.
But hiring an executive that has that knowledge base already, and they're coming in and they're going to learn the industry, they're going to learn the sector, they're going to learn the business model, but they're bringing in the acumen and the business knowledge around digital customer experiences, digital technologies, how to do transformation.
Obviously, you can work with consultants like Shift7, of course, but it's really important to have a steward and a champion internally at a B2B organization. Otherwise you are hiring a consultant like us to work with a CMO, a CIO, maybe somebody that– within a marketing team. But it's all going to be new to them. It's all going to be new to them, and it's going to be an uphill job. Now, that's okay, and that can be done. But the best way to do it in a fast and kind of a confident answer, a competent way, is to actually hire a chief digital officer. And we're seeing it more and more.
I would just leave you with this. We did a study around January, first part of this year, how many of our clients have chief digital officers and how many do not. Three years ago, it was less than 10%. Now it's up to 40%. So they're making that investment in this executive hire to champion and run and drive the budget initiatives, et cetera. So that's helpful.
Tim Butara: We mostly discussed all of this in the B2B context so far. But when it comes to these brands, to manufacturing and distribution, to these fields, are there any differences between B2C companies and B2B businesses? What's the deal here?
Andrew Walker: Yes, absolutely. It's a quick answer. Absolutely. Yeah. The main probably two differences are the technology platforms and cloud options that are out there are way richer, way more mature than they were five years ago, ten years ago, for that matter. So, the SAP, the Adobes, and one of the leading ones, Salesforce.com, they have some really leading cloud software components that are really geared towards B2B organizations. And they have different feature functionalities than B2C cloud software.
Trying to take an ecommerce platform or a content management platform that is sort of generic and vanilla and apply it to a retail company and apply it to a B2B company can be done. Anything in technology can be done. But the great thing about the world we live in today is most of these enterprise cloud software organizations that have a vertical focus on B2B, they have feature functionalities that are unique and specific to manufacturers, to distributors that are different than retail.
A great example would be something like split shipment. So in retail, that's not really a functionality. You or I buy a sweater online, we typically don't want to buy two and have one sent to yourself and one sent to a different address. You want it all sent to one address. Well, in B2B, when you buy 500 widgets, you often want to send 100 to one distributor, another 100 to a different distributor, another 100 to a different distributor, and so on and so forth. And those are different addresses. So that is a feature functionality that is different as an example. And those exist within a platform and can be configured to each customer's requirements and specifications.
Tim Butara: So if I'm getting this correctly, it's the customer experience that's kind of the main differentiating factor. Can we talk more about the role of CX in this context?
Andrew Walker: Oh yeah, I can talk long time about that. And you hit it right on the nose. That's a huge part of, frankly, any digital transformation. As I just said a few minutes ago, the tech can do anything. At the end of the day, tech can make it work. It's all about time and money to get there. But there's not too many things that are impossible.
But where the rubber hits the road or where the value really comes into play is the usability and the adoption. And the experience, as you call it, that is defined within the framework of any sort of cloud technology platform – could be content management, it could be just a simple microsite one page landing page. It could be a whole ecommerce shopping experience, checkout shopping cart experience.
And so how you think about the usability of that is a bit of perspective and a point of view by the pros and visual designers and interaction designers. But the element that the client really needs to spend time in with an organization like us is to think about what we call the journey, the user's journey. Understanding that and making it as seamless as possible, as usable as possible, and on point as possible.
So, for example, if you were to start every process with, hey, let's start you here with understanding our brand, and then after understanding our brand and the online experience, you're going to let us know about our history. And after history, we're going to let you shop our products. And then after that you can maybe check out, well, the user journey might say that everybody does their research on Google or Yahoo to find out your history and who your brand is. And they want to go to immediately to a product, right to a product page.
And if you don't understand that journey, you won't be able to design an experience that allows the user to land right there. It's really important to do that research up front, that's something that we do with all of our clients to make sure that the experience is defined. Because speed is important, for sure, usability is important, but adoption, frustration, drop off, all of these things, you want to mitigate in it because time is important and there's a lot of often competitive and options for any user out there. And so you want to make it as seamless and as easy as possible to ensure that the product is working for you and that this is a business, this is an ecommerce transaction.
Tim Butara: I think you made some really great point here, Andrew, especially you just repeated that the user journey has to be seamless. And I immediately thought of another huge factor that's contributing to the need for this, and it's the changing digital habits. It's the transition and the heavy usage of mobile. But then still, people have different habits. Some of them might check out a product on mobile, but then proceed with the checkout and adding to cart and purchasing the product on their laptop. And they would want the journey to be seamless. They wouldn't want to log into their account again.
And there's just all of these– I think that you already mentioned that before. Right. There are so many small elements that contribute to these changes, and it's very hard to keep all of them in mind. But you kind of need to, right? Especially if you're the one designing these experiences and managing them.
Andrew Walker: Yeah. And to that point, you triggered another thought, which is most– you and I might shop for a pair of tennis shoes or a pair of shorts while we're at an airport or while we're in a taxi or maybe while we're in our backyard. In the B2B sense, most of the interactions used to happen right here, right in my office, right at my desk, et cetera, on my computer, et cetera. That is the case for some. But when we do the journey research for other companies, now we find out that some of the suppliers are working remotely. They might be now starting to travel. So now they need a mobile experience, or they may need something that just fits a different sort of journey.
And I guess the other thing about digital experiences is, once you design them and put them in place, they don't exist forever. You have to continue as a B2B organization, that's an education part. Hey, listen, every three months, six months, nine months, at least annually, take a look at your users and how they're interacting with your brand, how they're researching, how they're checking out.
And tech is changing all of our lives, all the time. And you want to make sure you're bringing that into your own business. As soon as Amazon changes some way to do checkout, B2B organizations need to think about that, because now these same people that are buying their online paper towels and toilet paper, now they want to have a similar experience as it relates to their B2B functionality. So constantly looking at and evaluate is important. That's why we call it a work in progress or a WIP.
Tim Butara: Awesome. I think that we discussed a lot of interesting stuff, and now in this final part of the episode, Andrew, I'd like us to focus– because I know we talked in the discovery, preliminary talks, you mentioned that you work, you have a lot of experiences with a lot of renowned brands that would be of particular interest to discuss here. So can you share some of the most interesting lessons, details, insights from your work with brands such as Lincoln Electric, Global Industrial, et cetera?
Andrew Walker: Yeah. As I was getting ready for your call with me today, I thought about one of our toy manufacturers that really has gone through a corporate transformation. And part of their corporate transformation has been the digital transformation part. There's a lot of large consulting organizations, management consulting organizations like BCG, Booz Allen, McKinsey, et cetera, that do large corporate organization transformations. And a big part of their storyline is digital transformation. That's where Shift7 comes in place.
And so this toy manufacturer. Their sales model, we talked earlier, was predominantly built up of about 50 customer service reps that were in a customer service call center and any sort of small to medium or large toy distributors, from a small boutique that's in New York City to Target or Walmart.
They would call this 50 person call center to say, I need 100 more three year old puzzles. Or I need 400 more stuffed animal elephants. And they would replenish that. It was a B2B transaction. They would replenish through those orders that way. It was a phone call. It was a fax. Sometimes even sophisticated, it was an email. They wanted to make all of this a self service capability. They wanted the New York City boutique toy store to be able to go onto a website, see all of the toy products, see the inventory, see their preferred rates and prices for them that they had negotiated previously for all of their products that were unique to them. And be able to either create– with a credit card or a PO. Be able to make the transaction themselves at 11:00 p.m sat night. No phone call. No email. No fax.
And they wanted to not terminate those call center folks, but they actually wanted to turn them into other individuals that could help in a different way, whether it's focusing on bigger accounts that may be needed to be more of a human to human interaction, maybe to focus on marketing activities. And so they've transitioned all 50 people to different types of roles, and they've created the space for ecommerce to be a complete, what we call self service function.
And now all the distributors and even boutique toy stores that interact with their brand, they do all the replenishment, all their ordering through an online tool, just like you and I buy our groceries or whatever online. And so that was not only a strategic move that changed how they do sales, but also created more profitability and stickiness retention in their existing customers.
Additionally, they started with a reposition of their marketing, started to reach other toy distributors that they never worked before, and say, listen, we're easy to work with. We have a website. We can get you a login and password and authenticated and give you some preferred pricing, and you can see all this and shop on your own terms.
And as I said all that, that probably feels very B2C, probably very you and me and retail. But that's the transformation that most of these organizations are going. And that's a perfect example of what we want to be helping B2B companies move from a very dated, legacy, multi decade ago model to today.
Tim Butara: I love that example. It's not one that you would typically think of when you were listening to a topic about digital transformation, but that's why I love it even more. And you mention the phrase, human to human, and I think that's the catch here, right? Because most of these transactions, most of the stuff, even if it's B2C, if it's B2B, I think that we've already discussed this on at least one episode, but it bears repeating because it's such an important point.
It's all mostly having to do with humans. Even if you're interacting with software, some human designed that software, some human is managing that software. So in this sense, it's the only logical step for this move to happen, that we would kind of perceive B2B sales as having more B2C elements, I guess.
Andrew Walker: Yeah. And that's where the world should be going. That's where technology can be really exciting and fun and beneficial in a big way. And there's a learning curve. There's a learning curve for you, for me, and to get up to speed. And then things change, right? And then we got to learn some more. So you can imagine how much education and knowledge there is.
And I will share this last thing with you. One of the things for any B2B listener out there on your call is that there is a fair amount of sympathy or empathy that we have for our clients. They're coming from a place of real latency and behind in sort of their knowledge base. And the last thing you want to do with anybody that's playing catch up is to make them feel awkward or uncomfortable. So having empathy for their position, where they're at and say, hey, I'm going to bring you here. I'm going to move you with me. Versus, come on, let's go. Nobody likes to be educated and taught like that.
So a big part of what you're doing, which I appreciate through sessions like this, as well as what we try to do, is, yeah, we're running for-profit business, but we're also trying to make sure that we get people educated, smart on the way because it's all going to benefit all of us in the end. So anyway, thank you for having me.
Tim Butara: Andrew. This was such a great way to finish the episode. I really enjoyed our discussion. Thank you so much for being our guest today. Just before we wrap up the call, if people listening would like to reach out to you or maybe learn more about Shift7, where would you point them to?
Andrew Walker: Our website is the best spot, as always, www.shift7digital.com and a lot of different ways to contact us there, but thank you again for having me. Super exciting that you’ve taken the time for us, and it's a great topic. We're obviously passionate about.
Tim Butara: Awesome. The feeling’s mutual. Thanks for joining us, Andrew.
Andrew Walker: Okay, sounds good.
Tim Butara: Bye. Have a nice day. And to our listeners, that's all for this episode. Have a great day, everyone, and stay safe.
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