Too many distributors and manufacturers are still trying to play by the old rules. But the old rules do not work anymore.
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When the lenders stabilize their own companies they will be back in the inventory lending business, and these same, good cash flow-producing distributors will be top prospects. In the meantime, even great distributors look like bad credit risks to bankers who need to put their glasses back on.
Responsibilties for top executive post at the U.S. HVAC/plumbing distributor will be taken over by the CEO of Wolseley North America.
As difficult as it may be in current conditions, scenario planning has to be given more time in distribution executive team meetings, as well as distributor-manufacturer planning meetings. The worst reaction today is to say there is too much uncertainty to plan, so let’s just focus on the next three months. The vast majority of conversations I’ve had with executives have often included the observation that revenues dropped by more than double what the company was using as its worst-case scenario. Based on second-quarter results, distributors are hoping the trough is behind them.
With the latest round of earnings reports, I’ve been noticing a few terms being used repeatedly in each company’s outlook: uncertain, unclear, unknown. That uncertainty can make it difficult to choose the best way to respond to current economic conditions. You can always cut costs and improve efficiencies, but how can you tell if the choices you make now will be the best for the future when you can’t even glimpse the future?
In the latest issue of the Deloitte Review, authors Dwight Allen, Mark Klein and Craig Muraskin take on this question in their article What Next? Business in 2010 and Beyond." They write:
"The wrong answer is to adopt nebulous strategies in the hope of succeeding regardless of what happens."
While broad, generic responses can improve your chances of …
Brent Grover of Evergreen Consulting recently spoke with MDM about the importance of the concepts outlined in his latest book, "Strategic Pricing for Distributors: Tools and Rules for Building Higher Margins." Grover writes that strategic pricing can result in an increase of 200 or more basis points (2 percentage points) of gross margin percentage. "It’s far more dramatic than slashing the staff or reducing sales commissions," he tells MDM. This article looks at why now is a good time to implement a new pricing strategy and analyzes the importance of two key aspects: the sales team and technology.
Grover’s book, written as part fable featuring the fictitious Mahoning Distributors, and part practical guide, was released by the National Association of Wholesaler-Distributors …
Here at MDM we are in the midst of implementing some positive changes in how we do business. We are especially excited about one in particular, which we will be revealing to you in the next couple of months.
Our operations are different from a distributor’s – MDM is a part of Gale Media, which is a specialized publishing and research business – but through our work, we are reminded of the challenges that come with change. Undoubtedly, these challenges transcend industry lines.
While we hope the ROI will be positive, there is only so much a business can control. And that’s the fear factor in change.
But it’s also exciting and provides a great opportunity for the company. We recognize the only way to continue growing is to make this investment of time and energy. We feel like …
For Safety Products Inc. (SPI), Lakeland, FL, the key to success is evolving with your customers’ needs while focusing on your specialty. The safety products distributor was recently featured at TheLedger.com.
As detailed in the article, CEO and founder Ed Williams has managed to expand the company’s offerings without straying from its central specialty – no small feat when you look at how the safety products marketplace has changed over the last two decades. More broadline distributorsand distributors specialized in other product areas have added safety products to their offerings, bringing new competitors into the space. According to the article, "At one time SPI competed against a number of …
IndustryWeek today offers an endorsement of a distributor’s value; the online magazine looks at what it means for a distributor to offer true value, and also offers "nontraditional performance measurements," as provided by SKF’s Bill Moore, to judge whether a distributor is effective as a strategic partner.
Moore tells IndustryWeek that engineering assistance supplied by a distributor is one example of a value-add – it can address recurring equipment failure problems, and improve overall performance.
One metric Moore offers in the article – how prepared a distributor is to react in emergencies – anything from an equipment failure to a …
Michael Jackson's death has spurred nonstop coverage from CNN, the tabloids, and everything in between. The King of Pop is all over the Web. And it's rare to turn on a TV news program without Jackson at its center.
Since the launch of CNN and 24-hour news, we have been able to get our news whenever we want it. As the World Wide Web has grown, we've been able to get updates almost literally by the second – as we did earlier this week during the Los Angeles-based Jackson memorial service.
It really is incredible how we can garner information about an event halfway across the country close to real-time; it was not that long ago when we would have had to wait for the full report and pictures of the memorial service until the next morning's paper was delivered.
These days, we are …
In our latest Webcast on June 9, the "2009 Mid-Year Economic Update," Dr. Adam J. Fein examined the latest quarterly data and trending to give a clearer picture for what the remainder of this year and 2010 might hold for distributors. I recommend you listen and view the slides of this one-hour free event, by going to www.mdm.com/conferences.
Here are Dr. Fein’s key points, each of which he discussed along with outlooks on housing and construction markets, as well as other major wholesale distribution sectors:
- The recession is not over, but we are at or near the bottom.
- The latest economic data shows many sectors are either stabilizing or getting worse at a …
From around the Web today …
A commentary on the relationship between distributors and manufacturers by PVF industry veteran Robert Vick in The Wholesaler: It’s an honest rundown of perceptions on both sides of the fence looking at things like the cost of manufacturers’ going direct, the substitution of branded with non-branded product, wholesalers’ knowledge of their costs, openness to technology, and so on. He says:
"Survival for both the manufacturers and wholesalers depends on the changes we are willing to make for each other before we can make the changes we need to have a better understanding of the role each of us play in the supply chain and which direction we must take to make …
Wholesale distribution executives should not underestimate the impact of changes to compensation programs on their work force. To manage this sensitive area in these difficult times, a smart, proactive approach is needed to effectively manage human capital.
With today’s economic environment and turbulent times, it is no surprise that many companies have had to reshape their business as executives scramble to keep their companies afloat. Business leaders are challenged to find a balance between current finances and long-term strategy.
These business decisions also require a close look at the deployment of human resources, including difficult decisions regarding layoffs, restructuring compensation programs and pay practices, reductions in benefits, …
Many of our readers are seeing direct impacts from the wrenching transformation taking place in the U.S. auto industry. While it is easy to focus on the negative and sensational news our national media regurgitates constantly, there are some important takeaways from this situation for distributors and manufacturers who sell through independent distribution channels.
First: The recent financial meltdown did not cause the downfall of the Big Three. The financial crisis precipitated what arguably was more than two decades in the making. Remember the ghost of Ignacio Lopez, GM’s purchasing chief in the 1990s?
In the 20-plus years I have been covering industrial distribution channels, the supply-chain relationship between these manufacturers and their …
There’s a lot of debate out there today about the role alternative energies will play in the marketplace. Will it be the next big thing, or will it falter and only crack a small percentage of the overall market? Regardless of what some think about the potential in alternative energy markets, a handful of distributors and manufacturers are finding opportunity in the field right now.
According to Green Chip Stocks, the global solar industry more than doubled from 2007 to 2008, at $37.1 billion in 2008. Spain’s market for this kind of technology, for example, grew by 285%.
Rexel credited strong growth in solar markets for keeping its first-quarter sales in Belgium stronger than what it saw in the rest of Europe.
3M expanded its investment …
Many distributors and suppliers have had to trim their work force due to a dramatic decline in demand over the past half-year. But when the economy starts to turn around, distributors will face another challenge: building back up. This article features expert opinion on what to keep in mind.
One of the biggest mistakes companies make in adjusting their work force during down times is cutting too deeply and not being able to recover when the economy rebounds. They are very much focused on the short-run, says Peter Capelli, director of the Center for Human Resources at The Wharton School of the University of Pennsylvania.
This can cost companies in the long-run. In addition to the costs associated with layoffs – severance pay or …
As the recession rolls on and the focus turns to recovery, an article at WSJ.com points out that maybe things didn’t have to be as bad as they were. Lack of clarity in the supply chain has resulted in supply problems at many levels.
In fact, many companies cut dramatically due to uncertainty in demand when the market slowed; as a result, some cut more than they needed to. In some cases, shipments of goods were decreased more than demand had contracted. Whether production can catch back up when demand rebounds is one question some experts are asking.
Bad information or lack of information can lead to decisions that may not …
MDM recently spoke with experts on the topic of institutional knowledge retention, and the importance of putting into place a framework for making knowledge transfer part of the company culture. This article looks at the key elements to keep in mind.
Many companies are running leaner these days.
The situation – driven by downsizing and retirements – can trigger a loss of knowledge critical to the business, an issue many managers are facing. That’s something that managers everywhere in every industry overlook frequently when adjusting their work force, says David DeLong, author of “Lost Knowledge: Confronting the Threat of an Aging Workforce.”
Factor into the equation higher turnover among younger …
The nation’s largest banks are undergoing stress tests right now to determine their degree of leverage and financial health. On one level, it appears a little like getting the 300-pound heart-attack victim who has been eating jelly doughnuts for 20 years onto a treadmill. A five-minute exercise on a machine you’re not used to won’t solve the core problem. I think there’s a lesson for our industry.
Distributors and manufacturers have been undergoing stress tests of a different nature for at least the past 12 months. Nearly every company we talk with has had to make significant structural changes in their organization, including layoffs. Some let employees go for the first time in decades. Your current team has had to adapt and take on more complex …
Wholesaler-distributors are searching far and wide for ways to cut costs without cutting people. Here is a look at how some distributors have approached the process.
When business began to soften in November for W.P. & R.S. Mars Co., Bloomington, MN, the industrial distributor began preparing for a rough 2009. Then sales plummeted in January, and executives in the company knew some serious decisions had to be made.
The management team was pulled together to brainstorm ways to reduce expenses that wouldn’t involve layoffs. Our employees are so important to us that we wanted to make cuts in every area before we considered reducing our staff, says controller Beth Ahrens.
A desire to avoid layoffs is common among …
