02/17/2020 – Daniel Nill
Knauf Gips KG
At the end of January 2020 Knauf presented a new ordering portal for loose goods to the public (press release).
A little background for Container Next: The new ordering portal is an evolution and replacement of the previous one, called Container+ App. In itself, a further development of an already existing application is hardly worth reporting.
The really exciting thing about it is the communication regarding the role of distributors. In the press release, distributors are only mentioned in the following passage:
Orders or returns arrive directly at Knauf via Container Next. However, the delivery is invoiced as usual via the specialized building materials distributor.
Container Next thus ensures that the building materials retailer can invoice deliveries to the customer and thus also settle the bill. So far, so good. However, if you want to know more about the new ordering portal and go to the product page of Container Next, you can read the following paragraph in connection with the role of specialist distributors:
You can organize your building projects around the clock as a whole, independent of the availability of the order acceptance or distributor.
Two interesting aspects are hidden in this sentence:
The ordering portal for loose goods is praised as a far more in-depth solution for the processor. A "holistic" organization of the construction project suggests that the product category of loose goods is the first step to an ordering portal, which can do much more than just map a pure ordering function. However, whether Knauf is actually taking an end-to-end process approach here can only be guessed at at this point in time. But more about this later.
Independently of distributors, Container Next is available 24 hours a day. So what was rather carefully phrased in the press release is now formulated more clearly. The ordering platform aims to create independence from local building materials dealers, expand customer access and ultimately occupy it completely.
What role does trade then play here? To take a closer look at this aspect, it is worth taking a look at the publication "Logistics Challenge" (German) by Knauf itself. Bernd Knöchel (Head of Sales Services) gives an interview and insight into the challenges Knauf is facing under the title "Dealer warehouses are becoming increasingly important as logistics bases". Among other things, it is mentioned that in drywall construction, 75% of deliveries are handled by the building materials dealer's warehouse. Bernd Knöchel continues:
»The market, digitization and logistics are closely related. Only those who have these three factors 'under control' will be able to sell their products.«
With Container Next, Knauf has not yet gotten a grip on the market and digitalisation, but is on its way into the future. In this scenario, the retail distributor becomes a service provider, taking over mainly logistics tasks and offering one or two services on the side, such as invoicing for deliveries initiated by Container Next.
Construction Site Project Management (CSPM)
In the sense of the end-to-end process approach already considered in the Knauf section, Würth advertises CSPM here with the subtitle "We support you from planning to production".
An approach that is much more than just selling screws. In recent years ernom has invested a lot of effort to move away from the classic dealer business model. The measures include everything from a construction site support center with its own engineering office to BAULOC®, the product range for optimizing your own construction site logistics.
The aim is to get in contact with the potential customer as early as possible and to bind him or her to the company with consulting or other services. What Würth makes skilful use of is the historically grown sales structure with more than 500 branches all over Germany. The promise is always that the next branch office is not more than 20 minutes away.
In this way, the advantages are conveyed to the customer in passing, so that he can always fall back on the Würth infrastructure, which is not to be scoffed at, to cover the needs of the planned building projects. And those who want to have it even more convenient can have the required components delivered directly to the building site – to the processing location and at the required processing time. For large building projects, even building site branches are set up or dedicated building site salesmen are employed.
These are all efforts Würth makes to sell fastening material to its own customers in the end, but to win them over very early on with alternative offers.
The future of distributors in the construction industry remains exciting. Looking at the examples of Knauf and Würth, it becomes clear that there is no clear direction. It is not set in stone that manufacturers will in future simply switch off the trade and sell directly to processors or take over the business relationship. For one thing is clear: in view of their own logistical capabilities, manufacturers are often not (yet) in a position to map or serve the small orders of the processors. This is where distributors have the greater competence to act adequately and enthusiastically for the processors. However, there is a danger that the classically structured retailer, which is bound by traditional patterns of thinking, will develop into a pure logistics service provider and become dependent on the placement of orders by the manufacturers. One thing is clear: not every distributor can become a platform for products and services. However, every company with a distributor business model should think about how sustainable it is and how it can be turned upside down in order to not fall into avoidable dependencies.
Just like Würth. Often heard and propagated end-to-end process thinking, here (in parts) is firmly anchored within the organization. Innovative and courageous, Würth tries to change from a classical trading model to a platform. Looking at the history of the Würth Group, the topic of diversification has been anchored for a long time with the two divisions Würth Line and Allied Companies. This corporate DNA certainly makes it a little easier to start projects and initiatives that are upstream or downstream of the classic distribution function in terms of value creation. Whether this joy of innovation and transformation has already permeated the company is difficult to say. However, it can be said with certainty that the measures and initiatives for the industry cannot be taken for granted and are not worthy of note.