MDM Editor Lindsay Young sat down with Graybar Senior Vice President and CFO Beatty D’Alessandro at the January meeting of the National Association of Wholesaler-Distributors to talk about current market conditions and Graybar’s approach to growth.
The Graybar veteran also addressed the electrical distributor’s M&A strategy, recent drops in commodity prices, plans for technology and global opportunities. Part II of this interview, to be published March 10, will cover how Graybar is addressing the recruitment, retention and training of its employees.
Graybar is a $5.2 billion North American distributor of electrical and networking products.
MDM: How is Graybar doing this …
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While many consumers were cheering the drop in the price of oil this fall, the sentiment was mixed when it came to wholesaler-distributors.
Certainly, transportation costs may come down – particularly for distributors who rely on their own fleets for delivery. But for those who sell oil-based products like plastics and industrial lubricants, the value of inventory has also plummeted.
The trend is not limited to oil. The prices of most products on the commodities markets are falling as the world economy continues its downward spiral. Copper has lost more than 60 percent of its value since last summer; lumber has fallen to the lowest prices in 20 years. Corn and wheat saw similar spikes and falls in the past year.
The bubble has …
Manufacturers have for the past couple of decades commonly offered pricing tiers to distributors, setting purchase quotas to qualify for price discounts and offered rebates based on growth and penetration. These rebates have been of great benefit to distributors – actually we buy our bottom lines – and have been the primary driver behind the growth of buying groups.
In some industries, rebates based on quantity purchases alone have been removed from the table. Pricing at the time of purchase, and special rebates or pre-bates to grow specific markets seem to be the emerging trends.
This means that many in distribution will have to rethink their purchasing strategy and start to look at shorter term growth and market penetration. Pre-bates are paid …
MDM and Dr. W.R. McCleave, PE, recently surveyed readers on how they are responding to changes in the economic environment as it pertains to profitability in 2009. This article is an overview of those results. McCleave advises readers to reflect on the results and act accordingly with respect to their own situations. More than 250 industry executives responded to the survey from more than a dozen distribution sectors.
In a nutshell, the idea that resonated throughout the survey results was: Now is the time to act. As one respondent wrote, Climb into bed with your income statement, and act now. Responses to the profitability survey indicate that distributors and manufacturers are indeed responding to the new market conditions. …
Distributors, to say the least, are facing more uncertainty now than in recent memory.
In a recent MDM Webcast, Manage the Panic of 2009: New Rules for New Economic Realities," Evergreen Consulting's Brent Grover says we are now seeing the worst business conditions in his decades of work in the industry.
"Distributors are not accustomed to dealing with this uncertainty," he told participants. "Or the speed of decline in demand and prices."
Now more than ever leaders need to avoid hunkering down, and instead strategically prepare their companies for the upswing. When the downturn does reverse course, fewer companies will emerge, …
During the first part of 2008, the Brazilian economy experienced high growth in most sectors with an outlook for that expansion to continue. The first nine months saw loosened credit conditions, rising internal demand and strong export activity despite unrelenting currency appreciation.
But the fourth quarter was a different story. Growth slowed at an alarming rate.
Though the country is still in positive territory, the fourth quarter of 2008 was surprisingly on the downside, according to Fernando Sedano, an economic consultant for Manufacturers Alliance/MAPI based in Brazil. “I expect a tough first half of 2009.”
On the other hand, international companies that are already doing business there are seeing continued …
Harvard Business School Professor John Kotter recently spoke with MDM Editor Lindsay Young about his new book, A Sense of Urgency. Kotter has researched and written a series of leading books on change management including Our Iceberg is Melting, a tale of business change told in fable form. Kotter says one of the biggest mistakes organizations make when pursuing change is not creating a high enough sense of urgency among employees to spark the needed shift in direction. The current economic situation has exasperated change efforts in many companies.
As Kotter says in his latest book, A Sense of Urgency: At the beginning of any effort to make changes of any magnitude, if a sense of urgency is not high enough, and complacency is not low enough, …
Distributors can improve shipping predictability and decrease costs by reevaluating how they receive product from their suppliers. This article looks at how LTL is a little-considered option but can cost half that of parcel delivery and a third of overnight air deliveries.
Beyond renegotiating existing contracts, many wholesale distribution executives don't consider changes that can be made to shipping procedures to save money and improve cash flow.
It's like this is the way we've been doing it for so long, we don't think that there is another way, says Doug Savage, president of Bearing Service Inc., Livonia, MI.
But reevaluating shipping options and processes to get product from the manufacturer to the distributor can lead …
Despite the credit crunch and tough times, a company with the capital may want to take advantage of conditions to make strategic acquisitions. Here’s a look at best practices in acquisitions to ensure success in this strategy.
While the current economic environment and financial market meltdown have most business owners focused on conserving cash, controlling/reducing headcount and holding on for dear life, most of the wealthiest individuals in the world (including Mr. Buffet) will likely tell you that it is in these uncertain times that fortunes are made.
Our belief is that this is true for distribution and industrial businesses that have the capital and courage to pursue strategic acquisitions in 2009. Valuations have meaningfully decreased and most of the …
