GTDC Executive Panel: Distribution is in a State of Evolution

The discussion with the leaders of Arrow Electronics, D&H Distributing, Ingram Micro, and TD Synnex provides insights into the current and planned future state of distribution.

The distribution sector stands at a crucial crossroads, grappling with rapid technological advancements and shifting economic landscapes. Distributors across North America and beyond are heavily investing in expanding their capabilities to meet the evolving needs of their vendors, partners, and — ultimately — the end customers.

However, like all entities within the channel, distributors face a range of challenges, including supply-chain disruptions, increasing costs due to tariffs, and shortages of skilled talent. While distribution itself can be a source of mitigation for these issues, the capabilities of distributors often go unrecognized.

Distributors are evolving beyond their traditional roles of inventory management, order processing, and fulfillment. They're increasingly adopting digital sales and management platforms that streamline go-to-market operations, leveraging advanced analytics to uncover sales opportunities, and augmenting resources to fill gaps in vendor and partner capacities.

Keeping pace with the rapid evolution of distribution is challenging. At the Global Technology Distribution Council’s annual North America Summit, four leading distribution chiefs — Sean Kerins of Arrow Electronics, Dan Schwab of D&H Distributing, Paul Bay of Ingram Micro, and Patrick Zammit of TD Synnex — participated in a panel moderated by GTDC CEO Frank Vitagliano. Their discussion offered an insightful glimpse into the dynamic nature of distribution.

AI Transformation
The role of artificial intelligence (AI) in transforming the distribution sector is profound and multifaceted, reshaping the landscape of how goods are stored, moved, and delivered. Distribution leaders are increasingly recognizing AI's potential not only to streamline operations but also to transform customer interactions.

"AI integration is not just about technology adoption; it’s about revolutionizing our approach to market demands and customer needs,” said Schwab, co-president of D&H.

By automating complex logistical processes, AI can optimize inventory management, enhance supply-chain transparency, and significantly reduce delivery times. These improvements in operational efficiencies not only cut costs but also increase the reliability and speed of service — crucial factors for competitive advantage.

On the customer engagement front, AI facilitates a more personalized experience through advanced data analytics, enabling distributors to anticipate customer needs and preferences with unprecedented accuracy.

This capability allows for targeted marketing, customized product recommendations, and proactive customer service interventions, fostering stronger relationships and higher satisfaction levels. As a result, AI's integration into distribution strategies is becoming indispensable for companies looking to thrive in a rapidly evolving digital marketplace.

“AI is a major opportunity to impact all the technologies we take to market, requiring us to help our channel partners build or upgrade their practices,” said Zammit, CEO of TD Synnex.

Tariffs & Supply-Chain Disruptions
A top concern for distributors as they navigate the complexities of global trade and economic volatility is the impact of tariffs on supply chains. This challenge will require distributors to adapt swiftly to shifting economic pressures, regulatory changes, and unpredictable market conditions.

Efficiently managing the supply chain has become more crucial than ever, with disruptions ranging from logistical delays to unexpected tariffs affecting the flow of goods across borders. Distributors are employing sophisticated risk management strategies and flexible logistics solutions to maintain steady supply chains despite these hurdles.

"We’ve had a lot of experience with tariffs, and we’re leveraging our global network to mitigate risks wherever possible,” said Kerins, CEO of Arrow Electronics.

Unfortunately, the distribution executives conceded that tariffs will likely result in cost increases that will push up inflationary pressure in the channel. Just how much of an impact tariffs will have on pricing is unknown. "It’s fluid; we don’t know," said Ingram Micro CEO Paul Bay. "I think it’s an unknown value, but we’re planning to pass that through as it comes.” 

Enabling Cloud Services
Cloud infrastructures and consumption-based models have required distributors to overhaul their IT infrastructures and rethink their approach to data security, system integration, and service delivery. As data and applications move to the cloud, ensuring seamless connectivity and maintaining uninterrupted service becomes more challenging.

"The journey to cloud was supposed to simplify operations, yet it's been anything but simple,” said Kerins.

Distributors are implementing advanced cloud management tools that offer enhanced account management, simplify the partner experience, and expedite order and fulfillment processing.

"Integrating cloud services requires us to offer more than just technology," Schwab added. "It requires a comprehensive service approach to support our partners and customers effectively.”

Training & Offsetting Skill Shortages
Training is pivotal in addressing the industry's skill shortages, particularly in emerging technologies, where the rapid pace of innovation often outstrips the current capabilities of the workforce. As technology evolves, the demand for skilled professionals in areas such as AI, machine learning, and cloud computing continues to exceed supply.

On the panel, the distribution executives talked about the increasing need to invest in comprehensive training programs that not only enhance technical skills but also foster a culture of continuous learning and adaptability within their teams. These programs are crucial for equipping employees with the knowledge and tools they need to effectively manage and utilize new technologies, thereby enhancing productivity and innovation.

"We're launching specific enablement programs for AI across technologies, focusing on education and certification," said Zammit.

Furthermore, effective training isn't just about closing the skill gap; it's also a strategic investment in employee retention and satisfaction, as well-equipped employees are more likely to feel valued and engaged in their work. By prioritizing training, distributors can ensure their workforce is prepared to meet the challenges of today’s dynamic technological landscape.

"Investing in our partners through training doesn’t immediately sell products, but it builds the foundation for future growth and capability,” said Bay.

GTDC's Frank Vitagliano leads a panel discussion with distribution executives Paul Bay of Ingram Micro, Dan Schwab of D&H Distributing, Sean Kerins of Arrow Electronics, and Patrick Zammit of TD Synnex.

Enhancing Channel Collaboration
Strengthening partnerships within the channel is crucial for navigating the complexities of the distribution ecosystem. In a landscape where the integration of various supply-chain components and technology solutions is essential, robust partnerships lead to improved efficiency, enhanced problem-solving capabilities, and the ability to offer comprehensive solutions to end customers.

"It’s about training our partners not just to understand technology but to really harness its potential for their customers,” Schwab said.

Strong channel relationships allow for better communication and collaboration, which are vital in responding quickly to market changes and customer demands. Additionally, these partnerships facilitate the sharing of resources, expertise, and data, thereby enriching the entire distribution network with improved insights and operational capabilities.

By fostering a collaborative environment, distributors can create a more resilient and adaptive supply chain, which is essential for thriving in a competitive and ever-evolving industry. This strategic focus on partnership and collaboration not only drives business growth but also enhances service delivery, ultimately leading to increased customer satisfaction and loyalty.

Orchestrating Ecosystems
During the panel discussion, the importance of strengthening partnerships among vendors, distributors, and partners was underscored as a priority. The distribution leaders said that enhanced collaboration allows partners to leverage collective strengths to develop integrated solutions that address complex customer needs more effectively. "We’re thinking about our role as orchestrators of technology and service ecosystems, which is more representative of our future direction,” said Kerins.

The panelists said this collaborative approach is vital in harnessing and integrating emerging technologies like AI and cloud infrastructure, which require a high level of expertise and coordination. Distributors can enhance their agility and responsiveness by fostering deeper, more strategic partnerships, crucial for maintaining competitiveness in a dynamic global market.

"Interfacing our solutions with hyperscalers and facilitating seamless automation across platforms is crucial for our next phase,” Zammit said.

Future Directions
Everyone wants to know what’s going to happen in the future, including in the distribution segment. GTDC released a new report, Tech Distribution 2030, in which it maps the evolution of the distribution segment over the next five years. The distribution leaders weren’t shy in sharing their views on distribution’s evolution.

"Distribution today is at the nexus of technological innovation and market demand," said Vitagliano. "As distributors, our role is expanding to encompass a strategic partnership that leverages deep industry insights to empower vendors and resellers alike.”

The distribution leaders portrayed a transformative shift in which distribution becomes a strategic hub — essential in integrating services across various platforms and employing advanced technologies like AI and cloud-based solutions. This shift is aimed at enhancing operational efficiencies and crafting innovative, customer-centric solutions that address complex challenges, thereby strengthening business relationships.

"The future of distribution lies in our ability to transform from traditional logistics providers to architects of complex ecosystems," said Bay. "This requires not just technological upgrades but a complete rethink of how we add value to every transaction.”

Larry Walsh is the CEO, chief analyst, and founder of Channelnomics. He’s an expert on the development and execution of channel programs, disruptive sales models, and growth strategies for companies worldwide.