When I started as editor of MDM in 2005, I was consistently writing news articles each quarter on double-digit sales increases. It’s no surprise, given current economic conditions and financial market turmoil, that double-digit growth has been a rarity in recent quarters.
Most distributors focused on North American markets are recording single-digit growth. Those focused solely on construction-related markets have recorded steep declines and net losses -a fundamental change. Manufacturers with business abroad have seen double-digit growth, but when they break it down, North American sales are low single digits, flat or negative. As a result, many distributors and manufacturers are focusing on profitability.
As we wrote recently in MDM, distributors should make up …
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The ideas in this article posted on Outsourced Logistics may help you improve the efficiency of your fleet. The article was provided by Ryder System Inc., so does include some advertising. Still, with rising fuel prices challenging bottom lines, all advice helps.
Some of the tips in the article:
- Train drivers to watch their speed, one of the largest single factors affecting fuel economy. Reducing speed to 55 mph from 65 can improve mpg by as much as 22%.
- Improve tire maintenance.
- Improve your preventive maintenance program overall.
- Leverage …
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 …
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 …
This issue includes an interview and articles on global market changes, private label strategy, a major international acquisition in the office products distribution sector, an analysis of ESOPs, and how one distributor is leveraging environmentally-friendly product offerings.
My first thought regarding this mix is how different distribution markets look today. Green”products were not part of the line card ten years ago. But like the happy lobster feeling the temperature of the water rising nicely, maybe my memory isn’t perfect when it comes to incremental changes. So I drew some help from the MDM Archives.
In 1998, suppliers and distributors were dealing with major structural changes in channels with the growth of integrated …
Over the past 10 years, the U.S. has seen solid growth in the number of companies with Employee Stock Ownership Plans in place, increasing overall by nearly 30 percent since 1999, according to one national group. One industry expert says the distribution sector is following that trend. This article looks at the benefits and challenges to moving forward with an ESOP.
More companies are starting to look into ESOPs not only as an exit strategy -though that remains the No. 1 impetus -but also as a way to receive tax benefits, fend off purchase by a competitor or improve employee productivity and retention. However, a unique set of challenges comes with those benefits.
The non-profit National Center for Employee Ownership estimates that new companies establish …
ProBuild Holdings Inc., Denver, CO, has appointed Bill Myrick as chief operating officer.
Myrick joined ProBuild in February 2007. Before his appointment as CEO, Myrick served as president of the company’s Strategic Initiatives group and had responsibility for supply chain, manufacturing, gypsum and market development.
ProBuild supplies building materials to professional contractors through more than 550 lumber and building product distribution, manufacturing and assembly centers, serving 42 …
A recent survey by McKinsey Quarterly (found here) says that nearly half of all respondents don’t expect their companies to raise prices over the next six months. The manufacturing sector was the one exception.
On the manufacturing side, nearly 90% have seen an increase in the cost of inputs. And only in the manufacturing sector, McKinsey says, did a majority of respondents say their companies had raised prices and will continue to do so in the next six months.
My takeaway: Now is not the time to shy away from price increases. Suppliers are eager to pass on their rising …
After four months and four bids, retailer Staples Inc., Framingham, MA, finally found the formula for reeling in Corporate Express NV. The offer to purchase the international office supplies distributor received the recommendation for approval from Corporate Express’s supervisory and executive boards on June 11.
The move represents a significant shift in business focus for Staples that until now has centered on the retail market. After this acquisition, 60% of its business will be in the delivery and contract markets.
It’s a great strategic fit that continues to build the delivery side of our business,”Paul Capelli, Staples vice president for public relations, tells MDM. In North America, delivery has been the fastest growing and most profitable segment for …
William Sanford, president and COO of Interline Brands, Inc., Jacksonville, FL, will step down from his positions immediately.
Sanford told the distributor and direct marketer of maintenance, repair and operations products that he will be moving to Philadelphia, PA, to spend more time with family.
The company will not immediately fill his position.
It has been a pleasure working closely with Mike Grebe and the outstanding management team of Interline Brands over the last 10 years,” Sanford said.
“However, I have decided that commuting between Philadelphia and Jacksonville would require more flexibility to control my calendar, a luxury that is not possible given my current responsibilities as Chief Operating Officer. This was an …
Industry veteran Joel Roth looks at how organizations buy supplies for MROP in a recently published book, The 20% Solution: A Practical Guide to Dramatic Cost Reduction in MROP Procurement. Roth says that in most organizations, raw materials, purchased components, capital goods and packaging materials represent 75%-85% of total dollars spent on physical goods. And MROP represents about 15%-25%.
The characteristics of MRO buying are different from other types of goods, he says -requiring entirely different methods of analysis, sourcing, negotiating, stocking and tracking and an entirely different cost structure.
Why did he write a book on the subject? The procurement of maintenance, repair, operating and production supplies accounts for 20% of total …
Case Studies: Hard Dollar Savings in MROP
Case Studies: Soft Dollar Savings in MROP
The procurement of maintenance, repair, operating and production supplies (MROP) accounts for 20 percent of total spending in an organization, but consumes about 80 percent of the time, effort and expense in purchasing, according to The 20% Solution: A Practical Guide to Dramatic Cost Reduction in MROP Procurement, a new book by industry veteran Joel Roth. This article contains excerpts and case studies from Roth’s book.
Roth says that very few organizations have analyzed and identified improvement potential in MROP procurement beyond price quotes. However, …
Case Studies: Hard Dollar Savings in MROP
Feature: Competitive Advantage in MROP
There are many paths to reducing “hard-dollar”invoice expenditures for MRO materials. Here are examples of some of those provided in The 20% Solution:
Special Negotiated Discounts -To negotiate the best deal, it is essential to understand the needs, problems and objectives of each party. Example: An earth products processor required special cartridge filters for its calcining and grinding equipment.
These filters were ordered 20 at a time, at a cost of $450 each, plus freight and emergency premiums due to long lead times and lateness in …
Case Studies: Saving Hard Dollars in MROP
Competitive Advantage in MROP
Purchase order costs include the entire procurement cycle: requisitioning, sourcing, placing the order, expediting, receiving, transporting, stocking, paying and so on. There are numerous soft-dollar savings that distributors can help their customers achieve, including bar coding, storeroom management, vending machines and electronic customized catalogs.
Potential cash flow and other improvements may very well exceed hard dollar savings potential. Here is one example outlined in The 20% Solution:
Consolidated Invoicing -The vast bulk of work performed in most …
Anixter International Inc., Glenview, IL, has appointed Robert J. Eck president and CEO effective with the retirement of Robert W. Grubbs on June 30, 2008. Grubbs has worked for Anixter for 30 years.
Sam Zell, chairman of Anixter, said: With Bob Eck’s 18-year Anixter career that has included diverse and increasing responsibilities, we expect a smooth transition and a continuation of the strategies that have contributed to the company’s …
The Home Depot, Atlanta, GA, home improvement retailer, announced it would no longer pursue the opening of 50 U.S. stores in the pipeline -some will be delayed by as much as 10 years.
The company also reported it would close 15 underperforming U.S. stores, representing less than 1% of the company’s store portfolio.
Closing a store is always a difficult decision because it affects both our people and our communities,” said CEO Frank Blake. “But, as with our decision to slow future store growth, this is the right decision and will bring long-term benefits to our associates and to our shareholders. We put our real estate projects through a tight capital efficiency model.
“This model prioritizes locations that make the most efficient use of capital, …
In a recent interview with MDM, Profit Planning Group’s Al Bates says that distributors must manage their loss of sales volume in a down economy.
If sales are down 20%, you’ve got to make dramatic changes. In that scenario, too often distributors do what I think is absolutely the wrong thing in an attempt to free up cash,” he says. “They try to lower accounts receivable and reduce inventory to make up for selling less. Inevitably that leads to sales declines getting even worse. Back orders go up. Customer service goes down and what might be a 10% sales decline becomes a 15% sales decline.” While cutting inventory and accounts receivable is a normal reaction, Bates tells MDM that the moves are compounded by the fact distributors don’t have much cash.
The …
MSC Industrial Direct’s latest Safety Products Catalog launch is part of its strategy to further penetrate existing customer accounts, according to Erik Gershwind, MSC’s senior vice president of product management, marketing and strategy.
The interest in safety products has been building in our customer base for the past few years,”Gershwind said. “We definitely saw a demarcation point after 9/11. Our customer base has a heightened sense of awareness of keeping the workplace safe and protecting the well-being of their employees.”
Gershwind said that penetration of existing accounts was a key growth strategy for the industrial distributor, based in Melville, NY. The company is also working to sell more MRO and safety products to customers acquired when it bought J&L …
Al Bates, founder and chairman of Profit Planning Group, Boulder, CO, wants to change how distribution executives think about their business. In this interview, he addresses dysfunctional behavior, alternatives to typical mindsets and ways that distributors can manage better in a turbulent economy. Based on his experience as a corporate financial planner and decades of data analysis, he’s not afraid to buck conventional wisdom. In fact, he enjoys it.
Bates has studied financial performance across dozens of wholesale distribution sectors for more than 25 years. His firm conducts the annual benchmarking report series, PAR reports, for more than 40 wholesale distribution associations. This interview discusses key themes from his new book, Profit Myths in Wholesale Distribution: …
