Here’s what 3M’s George Buckley had to say about current conditions and supply chain partner reaction in the manufacturer’s recent earnings call with analysts:
"While weak business conditions, poor consumer confidence and the psychological fear factor made it worse, we believe the principle cause of the severe downturn was the shortage of credit to lubricate the wheels of global commerce. That fact effectively locked the cycles of the world’s major economies into synchronism and into shrinking mode.
"… There are always three principle effects that one sees at times like these. The first is that the rate of contraction in sales at wholesale is always a multiple of the rate of contraction in point of sale or retail. This happens as the channel …
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On almost any given day, another company is announcing another round of layoffs in response to the recession. But even with the sky-high numbers we’re seeing, some analysts are beginning to say that it’s not as bad as it could be.
A recent survey conducted for Towers Perrin showed that companies have been taking a more measured approach to cutting costs, looking at a variety of options before resorting to layoffs. Of the 513 companies who responded to the survey, only 11% said they had made significant reductions in headcount (defined as 10% or more of the workforce). That said, 19% are now considering significant reductions or have such reductions planned.
Other methods being utilized include: hiring freezes or reductions, cutting travel and …
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 …
More ideas on managing in a downturn come from DC Velocity, a magazine focused on logistics.
A recent article offered some ideas to build a more flexible work force to better respond to today’s uncertain conditions.
Hiring older workers and interns is advice I hear often; many distributors are unaware that a lot of schools have internship programs. You can fill a vacant spot a lower price while training someone who could work for you post-graduation. Older workers are attractive because many are looking for part-time work and they are known to be reliable and productive. What’s more, they require little training if they have worked for you or a similar company their whole lives.
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This is the pdf of this issue of Modern Distribution Management.
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 …
Amazon.com surprised everyone in late January when it announced North American revenues were up 18 percent for the fourth quarter of 2008, and its earnings grew almost 10 percent compared to the year earlier fourth quarter. Worldwide sales of electronics and other general merchandise sales grew 31% to $2.89 billion for the quarter.
One aspect of Amazon’s success was that they had a successful new product that generated a lot of interest and did well: the Kindle electronic book reader.
What does that have to do with distributors? I think there are several important lessons for distributors when you start to look beyond the numbers. To start, last quarter was the worst holiday shopping season in decades for traditional retail across all categories. …
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 …
Knowledge@Wharton asks what the strategy is behind recent layoffs in an article on their site. More than half a million jobs have been lost since September outside of the financial services world, the article estimates. The author says that the job cuts "highlight operational weaknesses and strategic issues that have been lurking under the surface for years." And now the downturn has brought those issues to the surface.
In the recent MDM Webcast, "Manage the Panic of 2009: New Rules for New Economic Realities, Evergreen Consulting’s Brent Grover told participants that managing cash is key …
DeVilling & Associates, LLC, a Sarasota, FL-based executive employment search firm focused on the industrial marketplace, has joined resources with The Loriel Group, Brighton, MI, to offer outplacement benefits to individuals seeking executive and management positions. Resources are available to job seekers and companies looking to provide outplacement services to employees.
Mergers and acquisitions and business conditions have put pressure on companies to downsize and restructure their organizations. There has also been a new trend – we have witnessed a growing number of retirees returning to the work force, says Skip DeVilling, president of DeVilling & Associates. “These two forces call for a different and methodical approach to the competitive …
In today’s conditions, everyone is looking for ways to cut costs. One of the recommendations made by experts is to renegotiate set contracts. (See what Alan Beaulieu had to say on the subject of renegotiation in Economic Forecast Places Start of Recovery in 2010.)
How realistic is this method in cutting costs? According to a recent article on WSJ.com, companies have been able to negotiate savings of up to 15% of their operating costs by renegotiating leases. If you’re a good paying customer, there’s a chance your suppliers will also give you a discount if you agree to terms that can also help them, such as …
A recent survey shows that engagement among your top executives may be falling faster than any other group of employees, according to the Corporate Executive Board. (Read BusinessWeek article here.)
A CEB survey showed that just 13% of senior executives at the vice president level or higher (down from 29% two years ago) say they are willing to go above and beyond what is expected of them.”
CEB speculates that most companies feel that senior leaders are “just grateful to have a job.” But the reality is, “valued players are increasingly likely to be looking around.” According to the survey, one of four …
On his blog, Pembroke Consulting’s Adam Fein gives us his take based on his experiences at the National Association of Wholesaler-Distributors meeting last week on how the best companies are surviving the recession.”
He says:
“As I see it, the winners are those companies with the will, the skill, and the till to survive this recession. Here are some specific ideas I heard from executives at the wholesaler-distributors that are growing faster (or shrinking more slowly) than competition.”
His ideas: Work harder, enforce profit discipline, stay connected, acquire distressed competitors, and keep perspective (ie, …
Employees and their managers are on edge these days; uncertainty about jobs, strategic direction and generally the future of the company can breed a wide range of emotions.
A recent Wall Street Journal article addressed this, and the advice offered can be used by employees and managers at all levels. The article says that it takes deliberate thought and action” to get past the cuts.
The highlights:
- Confirm new business priorities based on the new direction of the business and the changing importance of certain projects.
- Take initiative by looking for work that needs to be done. (To this end, look for …
Industrial distributor Grainger, Chicago, IL, has named Court Carruthers to a newly created position as president of its international businesses in Canada, Mexico, and China. Carruthers’ new responsibilities include growing and improving Grainger’s international business operations, which had sales of more than $800 million in 2008.
Carruthers is currently president of Grainger’s Canadian subsidiary, Acklands-Grainger. He has been with Acklands-Grainger since …
Companies of all types have made tough cuts in the past two months, and have focused on tightening the ship for 2009. Every business activity has to have a clear ROI this year and many entrenched business models are coming under fire. In a survey of the MDM audience on profitability earlier this month, distributors indicate primary investment areas this year will be in new market development, online sales capabilities, and in outside sales activities.
While some people might think hybrids are the hope of the automotive industry, I think we will see distributors increasingly build more efficient hybrid sales models. Resource-guzzling outside salespeople won’t make the cut this year. Companies will get much more strategic about assembling a combination of online sales …
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, …
While the lead article’s title – Manage the Panic of 2009 – might seem extreme, it’s important to clarify its real meaning. Reports we’re hearing from distributors in January indicate they are not in panic mode. On the contrary, every distribution company has become very focused by necessity on cost control, created by the panic and instability in financial markets.
I think that’s an important distinction. This isn’t a typical downturn, where a company just needs to reduce costs across departments by a certain percentage until the tide turns. This time a distributor needs to upgrade financial skills.
The traditional financing and cash flow models distributors have used for decades have changed significantly, with much tighter …
The CEO of Sysco Corp., Houston, TX, Richard J. Schnieders, has announced his plan to retire on June 27, 2009, the end of Sysco’s 2009 fiscal year. Schnieders will continue as chairman of the board subsequent to stepping down as CEO on March 31. He joined Sysco in 1982, serving as CEO since 2003.
Bill DeLaney, Sysco’s executive vice president and chief financial officer, will become CEO. Delaney will continue to act as CFO until his replacement is chosen. In addition, Ken Spitler, Sysco’s president and chief operating officer, has been promoted to vice chairman of the board of directors and will continue in his current responsibilities.
DeLaney has been with Sysco since 1987, and has served in his current position since 2007. Spitler joined Sysco in 1986 and was …
Long-time industry consultant Bruce Merrifield addresses profitability in a recent post to his Web site. He says that companies have options outside of traditional downsizing moves to boost performance in these tough times.
He asks: How do we carefully: either sculpt away our corporate bloat (losing customers, products, people); or, redeploy losing-activity resources into revitalizing the ripped, profitable athlete that is hiding within the general average numbers?”
Toward the end of his post, found here, he recommends:
- Identifying the “super-loser” accounts that are in best …
