Why AI and Automation are Transformational for Distributors, Customers

• Use cases for AI and automation transformational for distributors include e-commerce analytics to drive inside sales, smart distribution centers, recommendations for reorders and improving customer support.
• Werner Electric Supply and R.S. Hughes have dug deep on automation for improvements across various areas.
• AI becomes more effective and efficient the longer it’s used.

Faced with an increasing array of complex technologies and services — such as cloud-based ERPs, e-commerce sites and the move to digitization — automation and artificial intelligence are taking center stage for distributors and their customers.

“Many of our customers are looking for ways to improve productivity, reduce labor content and, most recently, figure out how to combat the shortage of labor, and automation is part of the answer,” says Motion President Randy Breaux. On that note, Motion announced earlier this year that Aurelio Banda joined the company as its new group vice president of automation.

Distributors have used automation for years — whether it’s replacing humans on assembly lines with robots or automating order tasks on websites — but the true potential of automation is unlocked with addition of machine learning and AI-based algorithms. In short, machine learning is a precursor to AI. And as everyone who has watched HBO’s “Westworld” knows, AI becomes more effective and efficient the longer it’s used.

“We have entered the algorithm generation, and everything is being driven by algorithms,” says Mike Marks, founding partner at Indian River Consulting Group. “It’s (AI) relatively broad-based in B2C markets already. If you look at what happens on Amazon, and Alibaba, Etsy, and some of these other sites, people already have built these algorithms.”

AI in testing now

Marks cites AI work by Epicor and Infor that includes Epicor’s voice-activated assistant EVA (Epicor Virtual Agent) and Infor’s Coleman AI Platform, both of which are in testing. Marks says at a recent workshop he saw a demo where a salesman called into EVA, gave his name and the customer’s name as well as what the customer wanted to order.

“EVA was able to put a quote together for the guy on the phone, including special pricing that got emailed to him right when the phone call hung up,” Marks says. “If you think about it, both Epicor and Infor are ahead of their customers in terms of adopting this (AI) technology.’

“Look at Proton.ai, which is actually an AI app for inside sales, customer service and e-commerce. The cost on this is very low. For the [salary] cost of one salesman, you could actually put Proton in most large companies. The biggest barrier to entry is a lack of understanding by distribution executives, but that’s changing very fast. I think what the pandemic did is it made people a little more interested in, ‘Well, maybe I do need to look at that.’”

Use cases for AI and automation include e-commerce analytics to drive inside sales, smart distribution centers, recommendations for reorders and improving customer support. Both also have the potential to unsnarl supply chains, enable proactive maintenance inside warehouses and on manufacturing floors and solve the truck driver shortage through the use of autonomous vehicles.

Mike Page, chief marketing officer and chief technology officer at industrial distributor R.S. Hughes Co., says his company adopted Proton.ai in August of last year. R.S. Hughes now uses AI product suggestions to boost its e-commerce platform while enabling an omnichannel approach for insights into customers’ sales activity.

“Initially, we were looking for a solution to provide recommendations for reorder information on our website for our website customers,” Page says. “We wanted to prove out the recommendation and the AI results that it was delivering.”

R.S. Hughes, founded in 1954, started out testing Proton’s AI platform on its website to drive proactive inside sales. Once that model was proved, R.S. Hughes implemented it on its website. “We were pretty satisfied with it,” Page says. “In working with Proton, they came back and said, ‘Well, let us show you how to use it with your inside sales and customer service people,’ and so we adopted that test. Quite frankly, I was less optimistic that we would get great results out of it.  I was proven completely wrong. It was the most impactful and powerful thing that we’ve implemented in our business.”

Prior to Proton.ai, Page says R.S. Hughes’ customer service, or inside salespeople, were reactive to customers’ requests. “We were servicing,” he says. “We were solving problems, but I also want to add value to that call. Well, now with the direction that we get from Proton and this AI modeling, they can quickly and easily add value to the reorder product recommendations and do it in a way that is more fluid for the customer experience, be it on the phone, or responsive in email. It’s turned into a really good order process, but also a really good business model.”

“I think every business leader, with every process or program they put in place, want to know, ‘Am I really getting value for it? Is it really delivering what the expectations were?’ When customers engage on the website, I know what it turns into. When we’ve engaged driving our proactive inside sales team on those insights, I know what revenue turns into. When our reactive salespeople take action, we know when it turns into revenue.”

Will AI replace me?

One of the early concerns about AI and automation is that implementing both could lead to job cuts, which, in many cases they have. Page says the impacted employees could be moved to more meaningful jobs.

“Forget that we’re in a constrained employment environment and we’re struggling with headcount,” Page says. “Just take the value of what you want your human capital, your people, are working on. You want them in personal relationships, doing the things that are building the business, that are identifying problems that the machines can’t do.

“We don’t want them doing data entry. We don’t want them doing data collection. Apply where we are today with the employment constraint, and it’s helpful, but there’s not job replacement by this. I would encourage anyone who goes down that road to turn around and run the other way. You’ll get higher value out of it by implementing it.”

Marks, however, isn’t buying the premise that employees who lose their jobs to AI and automation will find new, meaningful roles within a company. The “unskilled” analog jobs are disappearing, according to Marks, and some of those employees aren’t capable of performing more advanced functions.

“It (AI) just flat-out eliminates those people that don’t have the skills to be redeployed somewhere else because the goal is that you don’t need the clerical people anymore,” Marks says. “Those people just basically become unemployable in terms of the new jobs, and we’re doing a terrible job on education.”

Marks says there are “a gazillion functional areas in any business.” AI can eliminate middle management in most cases because it’s making recurring decisions that typically have a small standard deviation.

“If a guy gets a price that ends up being 7.2% lower than what it was, I don’t need the vice president or sales director of pricing to do that. All those things get automated,” Marks says.

Automation transformational for distributors

Werner Electric Supply got into the automation game back in 2015 by teaming up with Conexiom. Mike Jirikowic, continuous improvement leader at Werner Electric Supply, says his company initially identified some customers that it could work with to automate order entries. Some of the requirements included customers that had clear text PDFs, or Excel sheets.

Werner Electric Supply, which currently has an inventory of more than 24,000 different SKUs, bought 20 licenses from Conexiom in 2015 and another 20 in 2016.

“Conexiom did another push for us and said, ‘Hey, we can help you go through your data, all the emails that are coming into your building, and we can scrub those for the stuff that might potentially work for you,’” says Jirikowic. “So, they went through all of our emails for like six months and got us a list of customers that they thought we were missing the boat on.

“They call that process order analytics and that was a really good thing for us. They identified the customers that we weren’t able to identify. And after they helped us identify those, we bought another 100 licenses.”

While there’s an ongoing labor shortage, Jirikowic says that ever since Werner Electric Supply started using Conexiom, it hasn’t needed to hire additional employees on the customer service side of its business.

“We’ve been able to leverage Conexiom to be able to keep our production at a high level without actually having to hire more employees,” Jirikowic says. “We probably have 250 customers and vendors using some sort of an automation tool with us internally so that we don’t have to do all that manual order processing or invoice processing.”

Werner Electric Supply has achieved 100% order accuracy with order automation compared to 96% manually. It’s also able to update information in 15 to 20 minutes when used to take half a day or a full day.

“We’re an automation company,” Jirikowic says. “We sell a lot of automation products. Not necessarily in the order entry world, but in the paper making process, food and beverage and all that type of stuff. That’s our business. So, if you’re going to talk the talk, you have to walk the walk.”