August 10, 2008

Pricing for Profitability

Management, Sales & Marketing, Strategy, Subscriber Only / Lindsay Young

Implementing an effective pricing strategy can be one of the best ways to achieve better gross margin. This article outlines a pricing model developed by Texas A&M University's Supply Chain Systems Laboratory and provides a look at how some distributors are using it to update their pricing strategy.

About three years ago, F.W. Webb, a regional distributor of plumbing, heating, cooling and piping products, took a part of its legacy IT system and dedicated it to improving the customer and product information available to salespeople.

About a third of our prices were being set manually by salespeople,"says Lawrence Mohr, the distributor's now-retired senior vice president of information technology. "We needed a way to provide information to inside sales so …

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The Question of Outsourcing IT

Subscriber Only, Technology / Jenel Stelton-Holtmeier

The decision to outsource any function is difficult because it requires the company give up some control over an aspect of its business. Because of its complicated nature, information technology is being considered more often for outsourcing. But what does outsourcing IT mean, and how does a distributor decide to do it? Here are the two very different answers that Strauss Paper Co. and Graybar found.

Six years ago, Patsy O’Grady had to make a decision: Was her role as chief information officer of Port Chester, NY-based Strauss Paper Co. to be an expert in the latest systems engineering concepts or an expert on technology as it relates to distribution?

With technology advancing at exponential rates, some companies are finding it more difficult for their …

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Monthly Wholesale Trade: June 2008

Economic Trends, Research & Analytics, Subscriber Only / MDM Staff

Sales. June 2008 sales of merchant wholesalers, except manufacturers’sales branches and offices, after adjustment for seasonal variations and trading-day differences but not for price changes, were $411.2 billion, up 2.8 percent from the revised May level and were up 17 percent from June 2007. The May preliminary estimate was revised upward $2.4 billion or 0.6 percent. June sales of durable goods were up 1.3 percent from last month and were up 9 percent from a year ago. Compared to last month, sales of computer and computer peripheral equipment and software were up 3.4 percent and sales of lumber and other construction materials were up 1.9 percent. Sales of nondurable goods were up 4.1 percent from last month and were up 24.3 percent from last year. Sales of …

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Commentary: Managing Process and Technology Transitions

Free, Subscriber Only, Technology / Tom Gale

The first two articles in this issue are indicators of how this industry is maturing. At the risk of oversimplifying, it wasn’t that long ago that success was often defined by getting orders translated accurately into invoices, then into envelopes in a timely fashion. A broken dot-matrix printer impacted cash flow! Pricing policy took shape in sales meetings, phone calls and split-second decisions on a case-by-case basis by each salesperson. When sales go up, get more order takers and processors to handle the increased volume. That model worked pretty well for many distributors until the downturn in the early part of this decade.

Today, more distributors are moving to electronic invoicing and ACH payments. Some dedicated niche applications, such as GPS-based delivery …

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MDM News Digest 3815

Free, Subscriber Only / MDM Staff

Industrial Distribution Group Inc., Atlanta, GA, distributor of maintenance, repair, operating and production (MROP) products and integrated supply services to manufacturers and other industrial users, is now owned by an affiliate of Luther King Capital Management. We are delighted that the merger with Eiger (the affiliate of Luther King) has been successfully completed,”said Charles A. Lingenfelter, IDG’s president and CEO. “The consummation of this transaction enables us to focus our full attention on our customers and suppliers. We will be a more agile company with the ability to adapt more swiftly in response to market changes.”Before the merger agreement, Luther King owned 14.9 percent of IDG common stock.

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MDM August 10, 2008

Subscriber Only / MDM Staff

This is the pdf of this issue of Modern Distribution Management. Apply the full $24.95 pay-per-view cost toward an annual subscription (within 30 days of purchase), which includes two issues a month plus access to more than six years of online archives and market data. Call 1-888-742-5060 or email info@mdm.com to …

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Second Quarter Public Distributor Report

Management, Strategy, Subscriber Only / MDM Staff

About this report: This is the inaugural report of the MDM Public Distributor Report, provided on a quarterly basis to subscribers of Modern Distribution Management. The report is available online only.

Click here to download this report in pdf.

As distributors see more price increases from suppliers, they are faced with the challenge of keeping prices manageable to their customers while maintaining profitability.

In the most recent round of quarterly earnings calls, few distributors avoided the price discussion. Here’s how a sampling of public distributors in various sectors are approaching the issue.

Impact of Housing Decline
“We are kind of caught between a …

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August 10, 2008

Pricing for Profitability

The Question of Outsourcing IT

Monthly Wholesale Trade: June 2008

Commentary: Managing Process and Technology Transitions

MDM News Digest 3815

MDM August 10, 2008

Second Quarter Public Distributor Report

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