To better understand the dynamics in the distribution software market, MDM spoke with distributors and more than a dozen software providers. This is the first in a series of articles based on those interviews. This article focuses on the relatively recent consolidation in distribution software and its impact on the distribution industry. Part II of this series will run Oct. 10, 2008.
Take a snapshot in 1995 of software for distributors. The picture is fragmented. For the most part, there were small providers, most focused on one or two product sectors. The landscape today looks very different from even five years ago -not to mention the vast shift we’ve seen over the past decade.
Consolidation of software providers in the early part of this decade resulted …
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With already tight margins in a struggling economy, some distributors are looking for creative ways to survive, and hopefully make a dollar or two along the way. A recent article from the Wall Street Journal at WSJ.com (subscription required) highlighted how some wholesalers are taking on a virtual retailer role to expand their sales base. Companies like GlassTileStore.com, operated by glass and tile wholesaler Eli Mechlovitz in New York, are setting consumer-focused Web sites for direct orders to fill gaps left by retail and other commercial clients that are also struggling.
Any commitment to selling online, whether to a distributor’s traditional customers or direct-to-consumer, requires a …
Recent events in the financial industry -Lehman Brothers filing for bankruptcy protection, Bank of America buying Merrill Lynch, the government stepping in to shore up AIG -have left many wondering how these events together with other factors dampening the economy could affect individual sectors.
Don Norman, an economist for the Manufacturers Alliance/MAPI, tells MDM that’s a good question to be considering but not one that manufacturers and those supplying manufacturers should necessarily panic about, thanks to a solid export market. The reality is that strength in the overall manufacturing sector may be keeping the current economic situation from being a lot worse than it already is. According to Norman, except for companies closely linked to the housing or automotive …
The twice-yearly MDM Survey on the Economy was conducted during the last two weeks of August. A similar survey was conducted in February. Here’s what MDM found overall, as well as a breakdown in distributor and manufacturer responses.
Concern over the state of the U.S. economy has grown among MDM readers over the past six months even as more believe conditions may soon stabilize.
Concern over the current state of the economy grew most among manufacturers who responded to the survey, with 25.4 percent saying they were very concerned”and 59.7 percent answering “concerned.”In February, those numbers were 25 percent and 50 percent, respectively.
Distributors showed slightly less concern, with 24.1 percent being “very concerned”and 56.2 percent …
When it comes to making decisions in an uncertain market economy, executives sometimes throw out the processes that have brought success during the up times. According to two recent articles from The McKinsey Quarterly, that is the wrong move. Instead, executives should be aware of current market forces while at the same time moving forward under the tried and true principles that have served them well in the past.
In its recently posted article, M&A Strategies in a Down Market, McKinsey analysts say that though executives are encouraged to “invest in a downturn,” they’ve found that most executives shy away from doing so in an uncertain …
This article looks at five key issues distributors and manufacturers should watch closely in the next year.
The U.S. House of Representatives plans to adjourn for the year on Sept. 26. And, with the August recess not over until Sept. 8, Jade West, senior vice president for Government Relations for the National Association of Wholesaler-Distributors, doesn’t expect much more to get done before a new Congress takes its place in January.
However, distributors and manufacturers may want to keep their eye on a few critical issues going into the next session.
Energy
The prices of finished energy goods -including home heating oil, gasoline and lubricating oils among others -increased 28 percent from July 2007 to July 2008, according to …
An analysis of the three major markets in Latin America -Mexico, Brazil and Argentina -forecasts solid growth for manufacturing markets in the region for the remainder of 2008 and into 2009. The author of that analysis, based in the region, spoke with MDM about what sectors are driving the growth.
All sectors of manufacturing in Latin America will likely see some growth in 2009, but automotive manufacturing has had particular strength partly due to internal demand in Brazil and Argentina, says Fernando Sedano, author of the Manufacturers Alliance/MAPI Latin America Outlook 2008-2009.
Mexico, the third market included in the analysis, has seen slower growth because of its close economic ties to the U.S., but has begun to make up ground through exports to …
According to a recent survey by RSM McGladrey, manufacturers and wholesale distributors are not optimistic about the direction energy, raw material and transportation prices are heading. Nearly half of the responding companies expect energy and raw material costs to increase by at least 10% in the coming months; more than half expect the same drastic increases in transportation costs.
The advice from Tom Murphy, executive vice president of manufacturing and wholesale distribution for RSM McGladrey? Get used to it.
This inflationary surge is not an anomaly -it’s a sign of a new, long-term global cost environment. It’s paramount that companies change the way they do business to survive now and thrive in the future,”Murphy says.
That’s not saying that …
Health insurance through associations seems to be a hot topic lately. The Industrial Supply Association just announced a partnership with the National Association of Wholesaler-Distributors to provide health insurance options to its members. The program actually has been in place since January of 2008 but this new initiative creates a co-branding experience that will improve access to information for all members of ISA.
A recent article on WSJ.com points out that many associations are looking for ways to provide this service to their members. The problem in many cases is that the insurance is actually being sold through bogus or phony associations and the …
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 …
Recently, United Stationers Inc. held a conference call to discuss its second quarter earnings. Though the earnings themselves are interesting -sales were up 9.7%, mostly on the strength of the ORS Nasco acquisition, what was more interesting was how the company is utilizing technology to address transportation costs and improve customer relations.
Sure, a lot of companies are utilizing route analysis software to improve delivery routes and reduce fuel usage. United Stationers is doing that as well. However, they’ve also worked with an outside firm to create a network of local and regional couriers to supplement deliveries already being handled by UPS or FedEx.
In particular, smaller orders or harder-to-deliver orders can be turned over to the courier network for …
Lean operation -finding ways to reduce costs and increase efficiency by improving internal processes -is not a new concept. Companies, starting with Toyota, began exploring the idea more than half a century ago, according to the Lean Enterprise Institute. But it wasn’t until the 1980s that most U.S. manufacturers began recognizing how the process could help them. And it’s taken roughly 20 years for many distributors to follow suit.
Chuck Cohen, president of Benco Dental, attributes the hesitancy of U.S. companies to embrace lean operations on the simple fact that we are a Big Gulp society”-we’re looking for the one thing that will slake our thirst instead of realizing that the best results may actually come in smaller packages.
“We have to stop asking ourselves …
For years, manufacturers have used the concept of lean to improve efficiencies in their operations. Now distributors are moving forward with their own lean initiatives – looking at ways to reduce costs by improving internal processes. In this article, a dental supplies distributor shares its experience with lean.
At the beginning, going lean seemed so simple to Chuck Cohen, president of Wilkes-Barre, PA-based Benco Dental: Assign someone to identify waste and work with employees to eliminate it.
But when some employees seemed unable to overcome the "We do that already" attitude, he realized it wasn't so simple.
"Lean is the most seductive yet complicated process I've ever been involved in," Cohen says. "It's really easy to do OK at it. It's …
On July 11, US Steel announced an increase of $40 per short ton on flat-rolled steel effective with September deliveries. In addition, AK Steel will be raising carbon steel prices by $50 per ton on September 1. These moves came just after analysts were starting to believe that U.S. prices may be hitting their peaks and preparing to level off.
It’s significant because it underscores the idea that Tom Balcerek, North American editor of Steel Business Briefing, expressed during my recent interview with him for our July 10 issue: A lot of experts are scratching their heads on where exactly this market will go in the next month or even the next year.
The one thing that is certain is that 2008 has been like no other year in the steel business. I asked each of the …
Around the globe, spiking steel prices and tight supply are having an impact on both small and large manufacturers and distributors. The tough market is forcing executives to make tough decisions without driving off customers.
Steel continues to be in short supply in the U.S. for the third month in a row, according to the June Manufacturing Report on Business released by the Institute for Supply Management. What’s more, steel prices have gone up each of the last eight months, and have doubled in the last six.
And though rumors abound in the industry that prices will stabilize, there is little agreement on when that stabilization will take place or what it will entail.
The problem in the U.S. is that steel producers are facing competing …
The Chinese government is taking some drastic measures to clean up its polluted air before the Olympic Games in August. Those measures include ordering industrial plants, like steelmaker Shougang and automaker Hyundai, to curtail their production or shut down for two months beginning on July 20, according to BusinessWeek.
Bryan Larkin, marketing director at consulting firm GXS in Gaithersburg, MD, told Businessweek that a fair number of companies worldwide were caught off guard by the new restrictions, and it’s too late to do anything to head off supply shortages that could result. We will see a different mix of goods or even empty shelves”as far away from China as the U.S. and Europe because of this, he said.
Companies that did have advance warning have been …
There may be some benefits to the weak U.S. dollar for U.S. manufacturers.
A Buyer MFGWatch survey conducted by MFG.com in May surveyed buyers to find out the impact of the dollar’s weakness in the global market on their decisions of where to source manufacturing. Of the more than 500 respondents, 47% said they were sourcing more business in the U.S. as a direct result of the decline in the greenback’s value.
That’s good news for U.S. manufacturers who have seen a modest rise in business from these decisions, according to the survey.
The impact may be best seen in the responses from international companies. Requests for quotes from international buyers for the five-month period of January through May nearly doubled compared to the same period in …
If you read our recent article about Employee Stock Ownership Programs, you know that there are a number of benefits that come from the difference in working culture. Border States Electric Supply, Fargo, ND, an ESOP, has seen that culture work in its favor in the recent economic turmoil many sectors are facing.
Our employees see the media reports, talk with our vendors and customers, watch the stock market and are tuned into the housing market/mortgage meltdown and volatile commodity markets,”CEO Tammy J. Miller told MDM recently. “As owners, they take action to minimize the impact of an economic downturn on Border States.”
With more than 1,000 employees, Border States has a lot of people working to make sure their company succeeds. Border States introduced its …
As the housing market continues to slump and new installations of central air systems with it, Watsco Inc., Coconut Grove, FL, continues to increase profits by building upon the growing replacement market.
Senior Vice President Barry Logan told attendees at the Piper Jaffray Industrial Growth Conference on June 11 that environmental mandates and aging systems have driven the replacement market to 75 percent of the business Watsco is doing today.
The mandate signed into law in 2001 required that all new air conditioning and heat pump units improve efficiency by 30 percent by 2006. In addition, use of refrigerants that deplete the ozone was to be phased out entirely by 2010.
Though new products don’t need to be in place before 2010, Watsco already …
When customers started asking for more environmentally friendly options, Hagemeyer North America recognized an opportunity to meet customer needs and help the environment at the same time. The distributor created an all-green catalog.
A lot of these products are products that we already offered; this catalog is just the first time we’ve collected them into one vehicle,”says Brad Pulver, Hagemeyer North America’s vice president for product strategy.
Most environmental offerings focus on electrical, because that’s the easiest, Pulver says. But Hagemeyer wants to provide a broad range of products across all three of the distributor’s service areas: electrical, industrial and safety.
Hagemeyer will continue expanding the catalog offerings as suppliers …
