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New Priorities Emerge For Distributor Selection

A drive to secure robust supply chains could create new opportunities and distribution agreements

 

The COVID-19 pandemic has brought the need for resilient and robust supply chains into sharp focus.

As industries, including construction, search for ways to secure robust supply chains, vendors and suppliers can expect to see an increased push for diversification of supply chains to be a priority. This could open the door for a wider range of products to enter the regional market and encourage construction’s traditionally cautious procurement sector to explore more fulfilment options for their buying tool kit.

“Over the near term, companies should explore supply chain diversification and leverage new opportunities arising from changing customer demands,” wrote Sarwant Singh Managing Partner and Regional Leader of Frost & Sullivan’s Middle East, Africa and South Asia (MEASA) operations[1]. ”Over the long term, product and service portfolio diversification will be critical to ensuring greater resilience.”

But what would a push for supply chain diversification mean to companies looking to enter the region through a distributor?

Contactless future

For one, it will place an emphasis on finding partners who can manage contactless distribution, especially for high-volume parts or components. Warehousing that achieves greater operational efficiencies through the use of robotics to automate picking and reduce person-to-person contact could become a new priority.

Options and agility

A robust supply chain means having options. Construction buyers could look to achieve greater agility in their product procurement, rather remaining loyal to a select few suppliers. As such distributors with a diverse and widespread regional customer base may be better placed to help new entrants find a market. It could also loosen the grip of sole-distributor agreements.

Track and trace

Track and trace requirements may become more stringent, broadening requirements beyond simple delivery and distribution monitoring. Distributors with mobile digital tracking capability will be better placed to handle any tightening of rules or regulations around product movement.

Risk assessment

Effective partners will be able to demonstrate they can reduce risk along the supply chain and move quickly to make alternate options operational, should the situation change[2]. This requirement will be a two way street if effective integration between suppliers and distributors is be achieved.

Safe working practices

Vendors will need distributors who can confidently handle safe working practices for their work force. They will need to look for businesses that have a full understanding of and are compliant with the varied labour requirements – and any COVID-related changes – in the countries around the region[3].

The emergence of these new priorities may add to the challenge of finding the right distributor in the region, but there is good reason to persist. Gulf countries have reportedly responded well to the pandemic crisis. According to the Brookings Institute GCC governments have “done remarkably well in containing the coronavirus outbreak”[4].

GCC governments were also quick to announce economic stimulus packages and the UAE has joined a growing joint ministerial statement from multiple governments pledging to keep supply chains open in the face of the pandemic[5].

This suggests that while the crisis will force the creation of more shock-resistant supply chains, there is also increasing support and commitment to help businesses achieve that very goal.

 

Sources:

[1] https://ww2.frost.com/frost-perspectives/the-business-impact-of-covid-19-on-the-gcc-region-implications-and-opportunities-for-growth/

[2] https://www.scjunction.com/blog/covid-19-supply-chain-impact-wms-gcc

[3] https://www.scjunction.com/blog/covid-19-supply-chain-impact-wms-gcc

[4] https://www.brookings.edu/opinions/brookings-experts-on-the-implications-of-covid-19-for-the-middle-east-and-north-africa/

[5] https://www.zawya.com/mena/en/economy/story/UAE_joins_a_joint_ministerial_statement_to_ensure_continuity_of_global_supply_chains-WAM20200503072856403/