Jenel Stelton-Holtmeier, Author at Modern Distribution Management

Auto Bailout Hits Wall, But Hope is Still Alive

Late Thursday, news broke that the U.S. Senate could not come to an agreement on a bailout loan package for the U.S. automakers. Now, hope for the Big Three lies almost entirely with the White House, where the president is considering using money from the Troubled Asset Relief Program to keep Chrysler and GM from filing bankruptcy in a matter of weeks. Collapse of the auto industry could cost 2.5 million jobs in related industries, according to Mark Zandi, chief economist of Moody’s Economy.com.

Automotive News reported that about $15 billion remains from the initial funding of TARP, exactly the amount the automakers say they need to stave of bankruptcy through the first quarter of 2009. (Read the full article from …

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December 12, 2008

Companies

3M Outlines Strategy to Weather Downturn

For executives at 3M, St. Paul, MN, coming out of the current recession as a healthy company requires more than the usual cost cutting measures; it also means changing the mentality with which one views the recession. That was the message presented by George W. Buckley, president and CEO, and Patrick Campbell, senior vice president and CFO, during a recent conference call to present earnings guidance for 2009.

When there’s a 2 percent turndown, there’s 98 percent of the market left,”Buckley said.

In keeping with this idea, Buckley and Campbell emphasized that 3M intends to maintain its research and development budget even while cuts are being made in other parts of the company. 3M recently announced layoffs of 1,800 people and plans to cut an additional 500 …

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December 10, 2008

Economic Trends

Advice from Automotive Suppliers: Communicate Internally & Externally

The U.S. automotive industry is struggling, and that means anyone in the automotive supply channel is likely struggling, as well. I recently spoke with distributors and manufacturers in the channel for an article on the impact they see down the line.

Mike Hamzey Jr., vice president and legal counsel for R.M. Wright Co. in Farmington Hills, MI, provided some advice when thinking about how to survive the crisis: Do what you have to do, but don’t alienate your customers. There will still be options when all is said and done; we’re not the only distributor in town.”

Keep the lines of communication open, not only internally but externally as well. Your customers are aware of economic conditions, and they’d prefer not to be surprised when you need to change terms of …

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December 10, 2008

Economic Trends

Distributors Weather Auto Turmoil

The slowdown in the auto industry is being felt well beyond the Big Three automakers currently appealing to Congress for help. Distributors and manufacturers that serve the automotive industry are struggling to keep their own businesses solvent; business for many of them has dropped precipitously over the past few months.
Jeff Stohr, president of Conveyer and Caster -Equipment for Industry in Cleveland, OH, says he began noticing a slowdown in automotive about five years ago, but the real turning point was Nov. 1 of this year.

Our business at that time was a fraction of what would be considered normal,”Stohr says. The distributor of material handling products, casters and conveyor systems has annual revenues of $10 million to $15 million, with the automotive …

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December 10, 2008

Economic Trends

Economy Top of Mind in 2009

With everything that has happened in the past few months, it is no surprise that the economy is on nearly everyone’s mind, topping the list of concerns for manufacturers and distributors in the annual MDM Reader Survey. The collapse of financial markets and continued tightening of credit has added to the stress of everyday business.

It’s enough for me to manage my own company but now I must analyze my bank’s financials on an ongoing basis,”wrote one industrial distributor in the survey.

The next 12 to 18 months will be tough for many in the industry, says Brent Grover, CEO of Evergreen Consulting: “Demand is weak, margins are squeezed and most companies are faced with costly excess capacity.”

The U.S. government hopes that recently passed …

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November 25, 2008

Companies

HD Supply CEO: Slowing Infrastructure Sector Won’t Fall Far

Distributors focused on residential construction markets have had to find ways to adapt to the relatively nonexistent new housing market over the past year. Joe DeAngelo, CEO of HD Supply, told me in a recent interview that he credits his company’s exposure to diverse markets as reason it’s managed to stay afloat in current conditions.

But those diverse markets are starting to feel the pinch, as well. Infrastructure projects, which DeAngelo refers to as having endless critical demand,”are starting to fall off. According to a recent article in the Wall Street Journal, cash-strapped cities like Philadelphia, Phoenix and Atlanta are requesting money from the federal bailout plan to help fund …

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November 18, 2008

Economic Trends

Layoffs Not Employers’ Only Option in Tough Economy

Every time we turn around, there’s another sign that the economy is hurting. On Monday, The Conference Board released its Employment Trends Index (ETI). The October index of 105.3 was down 1.8% from September and 12% from a year ago. The ETI has been declining for the past 15 months.

And Gad Levanon, senior economist with The Conference Board, isn’t optimistic about the near future. The sharp decline in the ETI in recent months suggests we will experience even greater deterioration in the labor market in the months ahead.”Demand for goods and services are down, and companies are responding by slashing their workforces, Levanon says. The reductions likely will continue for several quarters until the economy starts to see recovery.

But layoffs don’t have to be the …

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November 12, 2008

Building Materials/Construction

Keeping People in Their Homes: The Potential Impact for Residential Markets

On Tuesday, Fannie Mae and Freddie Mac (along with other mortgage companies) announced some of the first details about how they plan to keep defaulting mortgage holders in their homes. Some critics say the plan to rewrite terms of some of these mortgages to limit payment to 38% of homeowner income doesn’t go far enough.

And maybe it doesn’t. But, according to Hal Look, incoming president of the Specialty Tools and Fasteners Distributors Association and senior vice president of marketing and business development for ORCO Construction Supply, Livermore, CA, the measures announced are a first step toward recovery of the residential construction markets.

Look recently spoke with me about the condition of the construction markets for our Nov. 10 issue of MDM (see <a ...

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November 12, 2008

Building Materials/Construction

Construction Markets Outlook

MDM asked economists for their take on residential, commercial and institutional construction markets. Construction supply and building materials distributors also describe how they have adjusted to the new market realities. While many still write off 2009, some signs of improvement are emerging.

Signs that the boom in the housing market were coming to an end began appearing as early as 2006. At that time, companies like ORCO Construction Supply, Livermore, CA, began preparing themselves for what they thought would be a normal market correction.

We never expected it to get this bad,”says Hal Look, senior vice president of marketing and business development at ORCO and the incoming president of the Specialty Tools &Fasteners Distributors …

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November 10, 2008

Free

State of the Distribution Software Industry, Part 4: The Next Steps for Distributors

This is part of a series looking at the distribution software industry. This article examines challenges and what distributors should expect in the next five years.

In the year or so leading up to Y2K, many distributors upgraded their computer systems to protect their businesses from what was supposed to be a widespread system breakdown when the clock struck midnight on Jan. 1, 2000. The scare fueled massive technology investment in businesses worldwide.

And now, thanks to technological improvements making viable solutions more affordable and scalable to distributors of all sizes, many are looking to invest again or transition from their legacy systems to an off-the-shelf solution or a modernized interface.

In a recent MDM survey, about 24 …

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November 10, 2008

Economic Trends

Fed Reserve Survey: Smaller Companies May Have More Luck Securing Credit

A recent survey by the Federal Reserve System confirms what most of us have already felt: The credit markets continue to tighten as this financial crisis continues. The survey, sent to domestic banks and foreign banks with U.S. branches, asked banks to evaluate how their credit lending standards -both consumer and commercial -compared with three months ago.

Not surprisingly, none of the 76 responding banks reported an easing of credit terms for Commercial and Investment lending. Most indicated that standards were tightening somewhat,”regardless of the size of the borrowing company or the lending institution.

What is interesting to note, however, is that the banks seem to have a bit more confidence in the smaller firms when it comes to lending, excluding financing …

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November 5, 2008

Companies

HD Supply Facilities Maintenance: Switch to a New Technology Platform

What happens when a company operating on a customized legacy system sells part of the business?

HD Supply Facilities Maintenance learned the answer quickly after being sold by The Home Depot last year. In a recent article from Supply Chain Management Review, HD Supply Facilities Maintenance’s director of e-business Mark Linder writes about how the company had six months to set up its own system and transition customers to the new format.

The HD Supply case study shows how having the right partners -in this case, technology company Hubspan -can help foster success in such a transition. The two companies worked together to identify HD Supply’s needs and how Hubspan could meet those needs in …

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October 29, 2008

Free

State of the Distribution Software Industry, Part 3: The Growing Role of the Internet

This is part of a series looking at the distribution software industry. This article examines the role the Internet is playing in driving change in the way distributors do business.

In the last decade, the Internet has been one of the key drivers of technology development.

The Internet is the backbone today for anybody that’s in distribution, anybody in the supply chain and supply chain execution,”Rod Winger, Epicor’s director of product marketing. “You could not do what we do today without the Internet.”

e-Commerce
The emphasis on having information available anytime from anywhere has been a driving force behind many companies’moving into the realm of e-commerce, doing business with suppliers and …

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October 25, 2008

Economic Trends

The Difference a Few Months Can Make in the Steel Market

It’s amazing the difference a few months can make. In July, steel prices were rising daily and manufacturers like Posi Lock Pullers Inc. in Cooperstown, ND, couldn’t get a supplier to contract a price. As Dean Somerville, president of Posi Lock, told me then: They won’t even invoice our order until we have a truck there to pick it up.”(Read Pressures in the Steel Market.)

Now, the tables have turned. The rate at which prices are dropping has some steelmakers worrying they may drop below the break-even point of $650 per metric ton, as reported in the Wall Street Journal earlier this month. In fact, many …

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October 21, 2008

Companies

Anixter Follows Customers Overseas

Anixter International has recently made three acquisitions – two overseas and one in the Midwest. Here’s what the distributor’s CFO says about the company’s growth plans.

Expanding a company through acquisitions is about more than just growing in size, says Dennis Letham, CFO of Anixter International, a distributor of communication products, electrical and electronic wire &cable, and fasteners. It’s about growing in the right place at the right time in the right way. And, the Glenview, IL-based distributor has been finding those opportunities in many places in recent months.

Since the beginning of August, Anixter has made three acquisition announcements in the U.S., Mexico and Europe. Though Letham says the timing of the announcements was completely …

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October 10, 2008

Strategy

Trends in Warehouse Management

The Warehouse Management Systems market is growing rapidly, as technology has scaled to meet the needs of even the smallest distributors. This article looks at trends in WMS.

The Warehouse Management System (WMS) industry is facing a technology refresh,”driving many companies to upgrade systems they may have been using for more than a decade. “The old technology just isn’t available anymore,”says Steve Banker, service director for Supply Chain Management at the ARC Advisory Group.

WMS functionality has advanced well beyond inventory lists and tables. The increased pace of technology has also expanded access of Warehouse Management Systems to more small wholesaler-distributors. As a result, WMS sales in wholesale distribution are projected to grow at a …

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October 10, 2008

Free

State of the Distribution Software Industry, Part 2: Software as a Service Gains Ground

This is part of a series looking at the distribution software industry. This article examines the pros and cons of Software as a Service, a model of software deployment where the distributor, for a monthly fee, accesses a business application over the Internet.

In an industry where margins are tight, upgrading technology is often put off until absolutely necessary. High upfront costs and licensing fees for new products deter many businesses from making an investment. But a recent trend -Software as a Service -may be opening doors for even the smallest of distributors to buy into new technology.

Not everybody believes that Software as a Service, or SaaS -a model of software deployment where an application is hosted as a service and accessed by the …

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October 10, 2008

Free

Trends in the Logistics Industry

The results of the 15th annual 3PL Provider CEO Perspective,”presented at the Council of Supply Chain Management Professionals Annual Global Conference in Denver, CO, this week, offered few surprises for trends in the logistics industry. The survey of 39 3PL providers, conducted by Northeastern University’s College of Business Administration and sponsored by Penske Logistics, found that high fuel cost is keeping companies closer to home, “green”is still a hot topic, and the economy is slowing.

These are all issues that we here at MDM have been discussing over the past few months. (Read Editor Lindsay Young’s conversation with Dr. Barry Lawrence, director of the industrial distribution program at Texas A&M University, <a ...

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October 8, 2008

Economic Trends

Little Things May Add Up in Tough Times

In a tough economy, industries with tight margins are looking for new ways to save money. Talk about lean is on the rise (see the recent MDM case study Lessons Learned on Lean) and experts are chiding some executives for not taking the need to make changes to heart. (Here’s what economist Alan Beaulieu recently said, as published in the MDM Blog this summer.)

Even in that light, R. David Yost, CEO of drug distributor AmerisourceBergen, has taken cost-cutting to a whole new level. Yost’s efforts to keep spending in line -including answering his own phone rather than relying on a secretary -recently were featured in <a ...

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October 1, 2008

Companies

Supporting Multinational Customers Abroad: Anixter

With acquisitions in the past two months in Germany, France, Mexico and Wisconsin, Anixter International’s global growth plan may not seem clear. Companies often focus on specific geographies where they want to build their presence. And while that is a consideration for Anixter, according to CFO Dennis Letham, there’s a more important driver when making acquisition decisions.

“The real focus of each of these acquisitions is supporting the multinational companies that we serve as they expand globally,”Letham tells MDM in a recent conversation. “We want to support them …

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September 30, 2008

Posts By Jenel Stelton-Holtmeier

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