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What’s the key to increasing efficiency, driving productivity and improving bottom-line results in wholesale distribution? Employing “clear thinking” processes from top to bottom.

Ray Baxter, CEO of Kepner-Tregoe, explains in an interview on the Industrial Distribution website that “clear thinking is the last competitive advantage” in a time when information is immediately and widely available.

“To get and stay competitive today, businesses have to change faster and execute better than any of their competitors, but they need a well understood process from top to bottom to achieve lasting results,” Baxter says.

What Baxter is trying to convey is that companies need a solid management structure, or a “thinking organization,” to respond to what their competitors are going to be doing. That’s partially true. Every company’s situation is a bit different. Some are in the distribution environment and thrive because they’re the largest or they can move the product the quickest. Others are there simply because there is no competition.

However, for a true competitive advantage, it’s always a good idea to have leadership that doesn’t just take ideas and run with them without seeing the residual effect. It’s important to put some thought into how you use technology. For example, before a distribution ERP implementation, companies need to spend the time to clean up their business processes. You need to put some thought into how you get the most out of your technology.

To become a “thinking organization,” distributors must recognize that clear thinking doesn’t always come naturally. Even seasoned executives have natural biases that can lead to bad judgment and poor decision making.

“To embed those clear thinking processes throughout an organization from top to bottom is not easy,” Baxter says in the Industrial Distribution article. “It takes executive leadership and commitment over an extended period of time and incorporating the clear thinking processes into every existing process in the business.”

By making that commitment, distributors will make more focused strategic decisions, execute initiatives faster and solve supply chain problems quicker, according to Baxter.

Source: Industrial Distribution, November 2012