2024 Trends in the Distribution Industry

Written by: Henrik Jensen – Senior Director, Strategic Engagment

What does 2024 hold for distributors, 3PLs, and other businesses that keep the world’s economy literally moving? Definitely not more of the same.

Because while the business goals of every company in the distribution space remain the same — speeding delivery, optimizing inventory, reducing costs, driving revenue — the means of getting there are always changing.

This year, as in so many industries, the leading trend is artificial intelligence. But how many people are currently using AI (for example, to write blogs—but not this one!) is not really how AI will best serve distributors in 2024.

But AI is just one of the trends Argano’s distribution guild (comprised of both leaders in the industry and the technologies) has recognized as being pivotal in 2024. We see a few more. So, without further delay, we present the 2024 trends in distribution.

Artificial intelligence

Generative AI is all the rage. But in distribution, it’s less about generative AI like ChatGPT and more about leveraging AI for analytics.

As AI improves in 2024, so will predictive modeling, which will enable distributors to optimize route planning, minimize fuel consumption, reduce transportation costs, and quickly adapt in the face of geo-political or environmental change.

The data AI will collect, ingest, and help visualize can help a business predict demand patterns, improve inventory management, and prevent stockouts, as well as provide real-time visibility across every tier in the supply chain.

Additionally, AI can help drive predictive maintenance, helping a business stay ahead of equipment needs, ensuring proactive upkeep, and nearly eliminating equipment downtime.

Cloud-based workflows

The cloud long ago moved from “trend” to “must-have” as businesses upgraded their IT infrastructure from costly, rigid on-premises systems to agile, flexible, cloud-based solutions.

In 2024, however, we expect distributors and 3PLs to further their work in the cloud, facilitating incorporation of AI (see above), which is next-to-impossible to leverage outside the cloud, and automating routine workflows while driving more data. And it’s this centralization of data in the cloud that can provide key benefits, such as real-time collaboration among stakeholders, and improved communication and decision-making.

Addressing skilled labor shortages

While much of the world has moved on from the global pandemic, the skilled labor shortages incurred by the distribution industry during that time are sadly not yet a thing of the past. The good news is that the resources more companies need are right under their very noses: their own staff! All that’s needed is training and upskilling.

And while there are dozens of training companies ready to take your money help, the fast path to upskilling your current employee base lies in user-friendly technology. Automations and AI can help speed a user through most current distribution processes, and — best of all — increase employee engagement.

In 2024, we see “skilled labor shortage” trend being addressed not by adding hands, but by building expertise.

Economic uncertainty—making the most of trying times

Fuel costs. Tariffs. Changes in customer demand. Scarcity of resources. The economic challenges and opportunities in the distribution space are not its alone: they’re the essentially the world’s challenges and opportunities.

We see the trend here as being both technological and strategic. Companies will, for example, address rising energy costs strategically, choosing more efficient equipment and optimizing transportation routes. Concurrently, they’ll further communication across suppliers, vendors, and partners, ensuring all involved in getting products from A to B are working off the same data.

Additionally, we’ll see further investment in the tools that drive agility in the supply chain, systems like Dynamics 365 Supply Chain Management and Power BI, which, used together, provide a business with both the real-time data to identify bottlenecks and other challenges and the feature sets to help address them and/or create contingency plans.

Sustainability—a trend for 2024 and well beyond

Going green is not just good for the planet: it’s good for business.

More and more consumers are looking closely and where their goods come from, how raw materials are sources, manufacturing practices, etc. The company that focuses on sustainability has a story those consumers want to hear, connecting the customers’ vision to a company’s mission.

Distributors are getting help here, too. In 2024, we’re going to continue to see government investment in green infrastructure — such as EV charging stations — that will enable companies to implement energy-efficient vehicles more easily into their fleets. Leaning into solar power, LED lighting, and smart heating systems within facilities will also help distributors reduce their carbon footprint while reducing costs.

In short, in 2024, going green is a win-win-win: you help the planet, you give customers a story they want to hear, and you reduce long-run costs.

What trends do you see in distribution in 2024? How might the above trends impact your business? We’d love to hear what you think and share how we can help. Just contact us.