The past few weeks, with a few economic indicators going up here and there, have given many distributors a glimmer of hope that we might be near the trough of the business cycle.
For distribution executives, this is the toughest part of the cycle. The difficult decisions made on the way down are not easy, but the bottom line often does the deciding; conserving cash is king. Few distributors and manufacturers have avoided layoffs; indeed some have cut their work force for the first time in decades.
It’s always possible to be too conservative, but this downturn has redefined what that means. Markets are volatile. A day of strong orders is followed by a day when phones are quiet. It’s impossible to forecast effectively to start the rebuilding process. Many distributors are looking out only 30 to 60 days.
Yet this is the time when market share gains are there for the taking. The companies that have been able to maintain a strong and focused sales effort are best positioned to pick up new business as it develops.
I’m not sure there is any greater challenge for distribution executives than what is needed over the next few quarters. Keeping up morale and motivation will ensure the business will remain aggressive when there still isn’t a lot of proof that rewards and results are out there.
Reaction time is critical right now to not lose out on opportunities. There’s no clear answer, but the top priority is to get your team future-focused once again. Create simple goals. A recent McKinsey Quarterly survey found that balancing short-term survival with long-term strategy was a top concern for many executives.
The article warned businesses against abandoning strategic planning for survival mode, because eventually this crisis will end. Fixating on the economy creates tunnel vision. Focus your employees on actively turning the momentum around.
Distribution executives tend to feed on risk/reward opportunities. That’s part of leadership. Right now it’s important to acknowledge the hard work and tough decisions needed to survive this decline. Then focus on the plan for how to gain market share in the growth cycle that is starting to emerge.
Commentary: Now is the Time to Act
The past few weeks, with a few economic indicators going up here and there, have given many distributors a glimmer of hope that we might be near the trough of the business cycle.
For distribution executives, this is the toughest part of the cycle. The difficult decisions made on the way down are not easy, but the bottom line often does the deciding; conserving cash is king. Few distributors and manufacturers have avoided layoffs; indeed some have cut their work force for the first time in decades.
It's always possible to be too conservative, but this downturn has redefined what that means. Markets are volatile. A day of strong orders is followed by a day when phones are quiet. It's impossible to forecast effectively to start the rebuilding process. ...
For distribution executives, this is the toughest part of the cycle. The difficult decisions made on the way down are not easy, but the bottom line often does the deciding; conserving cash is king. Few distributors and manufacturers have avoided layoffs; indeed some have cut their work force for the first time in decades.
It's always possible to be too conservative, but this downturn has redefined what that means. Markets are volatile. A day of strong orders is followed by a day when phones are quiet. It's impossible to forecast effectively to start the rebuilding process. ...
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About the Author
Tom Gale
Tom Gale has been an MDM researcher and industry analyst for 30+ years on independent distribution channel trends, consolidation, technology and competitive landscape. He is a frequent speaker and moderator on these topics at company, marketing group and association meetings in North America and Europe.
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