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With 2024 shaping up to be another big year in distribution M&A, we spoke with several investment banks on the state of industry dealmaking, what’s driving it, best practices and the outlook for 2025.
Disruption. Innovation. Disruptive innovation. Innovative disruption. Take your pick. True innovation takes the distraction out of disruption.
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No matter how a distributor may be impacted by factors such as the uncertain state of the economy, the growing reach of a competitor or even where their company sits on the technology scale, the end priority is always around finding the best ways to bring value to the customer.
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Disruption. Innovation. Disruptive innovation. Innovative disruption. Take your pick. True innovation takes the distraction out of disruption.
Modern Distribution Management's monthly Industrial Inflation Index measures a cross-section of industrial supplies.
This index includes:
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Wholesale revenues, inventories and ratios from July 2019.
The industry is at an inflection point from a melting pot of trends that have been boiling over into more sectors of distribution. The biggest burner has been the technology revolution, which has us in this venturi of intensifying heat that is testing traditional distribution models like never before.
Distributors and manufacturers alike are facing similar challenges when it comes to attracting and retaining the right employees for their organization. Issues include the growing cost of wages, a shortage of available qualified laborers and an aging workforce.
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Despite some softening in the first half of 2019, most MDM Trends survey respondents feel relatively optimistic about the coming year, but would like to see the tariff dispute come to an end.
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Distributors and manufacturers are increasingly investing in digital capabilities to reach larger audiences, understand customer preferences and grow their business.
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In MDMs 2019 Market Trends survey, we asked the industry to share whats on your mind as we head into 2020. The start of a new decade is carrying some old concerns with it, namely challenges surrounding retention and acquisition of talent, updating and taking advantage of evolving technology and the possibility of dealing with an economic downturn.
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MDM’s top news briefs from News briefs from September 11 – September 25, 2019.
As we approach the next decade, this industry is at an inflection point from a melting pot of trends that have been boiling over into more sectors of distribution.
The company has named Kevin Murphy as the Group CEO.
Daniel Zhang succeeds Jack Ma, who announced his retirement one year ago.
This multipart series will explore the convergence of trends that is both drawing and enabling these new competitors and others into the distribution market.
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Distribution companies are increasingly hearing about the digital transformation imperative for a reason. Making the technology investment is no longer optional. As explained in presentations at MDMs 2019 Digital Distributor Summit, commoditization, competitive innovation and changing market dynamics are combining to forever alter the distributors traditional value proposition.
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B2B e-commerce is a $1-trillion industry thats rapidly growing. For distributors to keep up, Marty Acks of CDI Technology recommends making mobile website optimization a priority, as well as improved page speed and a variety of payment options.
The MDM Market Snapshot, based on data from MDM Analytics, includes market demand for Safety Products in the U.S., plus the top end users by 6-digit NAICS.
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MDM’s top news briefs from News briefs from August 26 – September 10, 2019.
Three real-life examples of distributors who have adopted successful strategies.
Online marketing offers a natural extension of a wholesale distributor’s business model. And the real beauty of the medium lies in the ability to track response and focus efforts to yield the best results. This article looks at the importance of leveraging the interactive power of the Internet to win and strengthen customer relationships.
This article is excerpted from Outlook 2009: An Executive’s Companion to Facing the Forces of Change – Lead the Way in the Supply Chain, published by the National Association of Wholesaler-Distributors.
As the National Association of Wholesaler-Distributors’ Facing the Forces of Change® study pointed out, customers are using the Internet to bypass some of the information, education, and sales functions distributors have …
As publisher of a 40-year-old subscription newsletter reporting on the wholesale distribution industry, I’ve seen a rapid shift in how our audience of wholesale distribution executives increasingly accesses our online offerings – on the Web, mobile devices and email.
Here are some of the lessons I’ve learned as we’ve built out our online information service in the past five years.
Lesson 1: Web site = Marketing Hub
Web sites have tended to grow haphazardly to serve many masters within a company. Marketing has to drive its development and architecture, and integrate transactional functions under the primary objectives of lead generation and customer service.
Combine the current successful marketing mix with e-mail and search engine marketing (SEM) to funnel customers …
Recently, the Wall Street Journal ran a best practices article with lessons distributors can apply to their own services businesses: "Beyond Products: More manufacturers are branching out into the service business. Here’s how to make the move successfully."
One of the key points made in the article: Many manufacturers who have moved into services have gone without a clear strategy. I’m sure some distributors will relate to the challenges outlined, including trying to sell services that were previously free (See Emerging Model: Fee-for-Service on how Cardinal Health and other drug distributors try …
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 …
It’s easy to confuse expectations with values. At least according to Jim Ambrose it is. Think about it this way. I have a restaurant I go to at lunch because it’s close. Lousy service; food’s OK. And I expect that, says the president of BranchManagerCEO.com. “The manager always asks me if they met our expectations today, and I say yeah, you certainly did. The food was lousy and the service was lousy; that’s what I expect. But it’s close so I keep going back.”
Ambrose values the proximity and is willing to accept the mediocrity of everything else because of it. However, if a restaurant were to open up in the same area with better food and better service, he …
With sales low across the industry, many companies are fighting just to break-even. However, there may be more opportunities for improving your sales than you expect. Jim Ambrose, president of BranchManagerCEO.com and founder of Jim Ambrose’s Workshop, says now is a great time to retrain and reenergize your sales force to find new ways to gain market share.
MDM: Today’s economy has created many challenges for businesses. What impact has it had on the sales process?
Jim Ambrose: Most, if not all, of my clients tell me that one of their big issues is that their salespeople tend to get comfortable in their account packages. And the problem with getting comfortable today is that your accounts aren’t very busy. If the …
It was a pleasure yesterday to take my car to a small repair shop that runs on high levels of customer service. The father-son team that runs the place competes against all sizes; in fact, I would guess most of their competitors are much larger. But I’ve known many to refer friends to the shop. In fact, I was referred myself, and will no doubt return the next time something threatens to fall off my car.
I left with a fixed car, a sense of trust and more money than expected left in my pocket, a rare combination these days on the way out of an auto repair shop. It was a nice reminder of the importance of a positive customer experience each and every time a customer sets foot in your shop.
While customer service is important in both boom and bust times, it could be …
Editor’s Note: Mel Ettenson, editor of Global Plastics Letter (www.globalplasticsletter.com), will be contributing regularly to the MDM Blog on topics of interest to the plastics industry and those connected to it.
Bayer MaterialScience AG, a producer of polymers and high-performance plastics, has developed a coating for its Makrolon polycarbonate (PC) sheet material making it suitable for use in automotive glazing. Having just passed a major Taber abrasion test after running through a commercial car wash once a week for three years, its use in automotive sun roofs, followed by side window glazing, is assured. Windshield applications could follow.
This breakthrough technology will offer immense weight savings and thus significant fuel efficiencies since PC …
Mike Emerson and Mike Marks of Indian River Consulting Group recently presented "Sales Force Compensation: Best Practices in Tough Times" in a free MDM Webcast sponsored by Sage. Emerson wrote a followup article for MDM, Align Selling Resources to the Market. In the article, published in the April 25, 2009, issue of MDM (found here), he encourages distributors to take a closer look at their customer base to determine what type of sales resource is appropriate for each customer based on that customer’s needs.
For example, customers that require assistance when selected products need active involvement, while those that use internal capabilities to select products need passive involvement on the part of the distributor. …
For distributors who have had to implement reductions to their sales force, there is a legitimate concern that as the number of salespeople go down, so will revenues. A three-step process exists to help mitigate these potential effects.
One question many distributors are asking is, How can I reduce costs without losing sales?
The answer: “Align your selling resources more closely with the market.”
Achieving this is not simple, but a proven three-step process for doing so does exist. The steps: Segment customers, utilize effective sales management practices, and ensure incentive structures are in alignment. This article will discuss the importance of each step and illustrate how the outcomes from each will enhance …
The stimulus package passed in February is about more than just shoring up business-as-usual organizations, says Pembroke Consulting’s Adam Fein. Fein identified more than $15 billion that has been allocated to enhance or create green projects on the state and federal level – a significant increase over previous funding. For example, state energy programs will receive $3.1 billion dollars – a funding jump of 70% over 2008.
This new funding can be a boon for distributors, particularly those that service the electrical and homebuilding/renovation sectors. Money will flow into projects for weatherization – anything from rewiring to insulation – and for improving the smart grid.
States and municipalities are still trying …
There’s an old joke about a headache going away because you stopped hitting your head with a hammer. That’s one way to view the few pieces of good economic news trickling out over the past four weeks. Most analysts are getting excited because certain economic indicators are not falling as fast as they were.
Whether we have hit bottom is still wild speculation. The important thing is that these signs of hope are necessary precursors to a recovery. We have to wait to see if they are real. It’s encouraging that the first wave of good and less-bad news at the end of March has been more or less sustained into mid-April. Even the steel industry and the deep pit it has been in has started to look better. And this week’s market and positive earnings reports …
Castrol Industrial North America Inc., Naperville, IL, is implementing changes designed to increase the efficiency and effectiveness of its North American manufacturing, storage and distribution operations.
The sharp economic downturn is having a significant impact on many of our customers says Dave Fuerst, president. “It is crucial for us to continue driving our own efficiency efforts to be competitive in the marketplace.”
Among the changes announced was the consolidation of manufacturing operations at Castrol’s Warminster, PA site, which will drive further scale and procurement efficiencies for the business and create a world-scale industrial fluid manufacturing and supply operation. Castrol will close a smaller manufacturing …
Dell Computer Inc. seems to recognize the value of wholesaler-distributors in expanding its reach in the small and medium-sized business markets. The build-to-order computer giant will be working with Ingram Micro Inc. and Tech Data Corp. to target new customers in those markets, according to this article at itchannelplanet.com.
At first, Dell will provide the distributors with desktops and a few notebooks from its Vostro line, as well as some monitors and limited hardware warranties. Down the road, the computer-maker may expand the products offered through distribution.
Ingram Micro President Keith Bradley said in <a ...
A recent industry survey looked at Special Pricing Allowances. According to the survey by Allen Ray Associates and Channel Marketing Group, about a third of distributor respondents have more than 250 individual SPA, customer-defined, agreements. Another 13.6% had more than 100 SPAs.
About two-thirds say that the number of SPAs they negotiate will increase. Just 9.1% feel that they will eventually have fewer SPA agreements.
Distributors in the survey ranked SPAs as a 7.64 on a scale of 1-10 in importance to their current and future profitability.
"SPAs can be a competitive advantage for manufacturers and distributors to take market share when appropriately used," Allen Ray says. "The key is distributors claiming their funds to ensure …
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. …
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 …
Some distributors have been reluctant to deploy and train their employees on email because it carries technical and management issues with how to use it appropriately and effectively.
It’s time to rethink email as a tool. Email does not Spam people; people Spam people. Your competitors are using email to not only reach your customers, but they are using it as the most efficient and cost-effective way to reach your customers. Can you say the same? If you argue that your customers don’t spend time online, it may be true that they don’t visit your Web site to shop for their supplies. But do they use email? Do they have mobile devices?
Email marketing expertise and tools are evolving at a fast rate. Some distributors are able to segment their email database into key …
Value-added selling has certainly been a buzz word, and very few would argue that doing value-added selling well can be a challenge, especially if a competitor is selling essentially the same product.
A recent blog on Inc.com addresses this challenge:
“Despite the overuse and misunderstanding of the ‘V’ word in recent years, selling organizations have received the message: The one and only thing customers really want to know is, ‘What is the value to me if I buy from you?’ If everyone got the message and the value strategy is in play, why aren’t customers responding? At the same time, why are sales cycle times lengthening, the number of ‘no decisions’ increasing, …
In this era of uncertainty, how to best incentivize a sales force is likely top of mind for many distributors. A recent article at inc.com talks about the sins of commissions,” and how sometimes, incentive plans devised in the corporate office don’t always translate on the ground floor level.
Here’s the link to that article.
The author quotes Harvard Business School professor Robert Austin, author of Measuring and Managing Performance in Organizations. He says that when you try to measure people’s performance, you must take into account how they will react. A quote from …
Distributors still view Amazon as a threat, despite the company’s overture to them as a B2B e-commerce option.
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In this two-page report, available to download in PDF after log-in, we feature data on merger and acquisition trends and financial metrics for the largest publicly traded distributors across diverse sectors in the second quarter of 2015.
In partnership with Houlihan Lokey, an investment banking firm, the report includes data on M&A activity trends across all industries (not just distribution), as well as valuation multiples for deals in all industries.
Reasoning for and consequences of not investing in e-commerce.
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Acquisition strengthens BlackHawk’s footprint in Colorado.
Acquisition enables company to meet demand for solar racking.
Technology is great, but sometimes it can cut into a companys productivity.
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Unlike previous cycles of strong merger and acquisition activity in distribution, todays market is unique in that strategic buyers and private equity firms are going after the same targets, setting the stage for an especially compelling consolidation story in the second half of 2015.
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The fourth annual MDM distribution e-commerce survey conducted with Real Results Marketing revealed that the barrier to entry for e-commerce has lessened, but distributors are still deciding if they should launch e-commerce capability on their websites.
Part 1 of this series showed how the industry’s e-commerce offerings are maturing.
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More than half (56 percent) of respondents to the latest MDM-Baird Distribution Survey plan to increase overall investment levels in analytic capabilities, which doesnt mean just an investment in technology platforms. It requires investment of time and people to effectively utilize the amount of data available, regardless of the level of maturity.
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Amazon Business has replaced AmazonSupply as the Internet retailers B2B website, which hopes to bring businesses a B2C shopping experience to B2B.
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Technology continues to introduce new disruptions to the supply chain. Jim Barnes, ISM Services managing director, recently spoke with MDM about the potential these disruptive technologies have for fundamentally changing how the supply chain operates.
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Distributors must start viewing IT as strategic rather than just tactical.
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In this two-page report, available to download in PDF after log-in, we feature data on merger and acquisition trends and financial metrics for the largest publicly traded distributors across diverse sectors in the first quarter of 2015.
In partnership with Houlihan Lokey, an investment banking firm, the report includes data on M&A activity trends across all industries (not just distribution), as well as valuation multiples for deals in all industries.
Move beyond a defensive mindset for investing in digital.
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The fourth annual MDM distribution e-commerce survey conducted with Real Results Marketing revealed several key trends:
This article examines the results of the 2015 State of E-Commerce in Distribution Survey and how the industry’s e-commerce offerings are maturing. Part 2 will look at best practices for distributor-integrated marketing approaches to support electronic shopping and buying.
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Analytics tools are playing an increasingly important role in distribution. But many distributors recognize that they lack the capabilities to implement an effective analytic strategy in their businesses.
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CEO: E-commerce channel growing faster than traditional channels.
Mayer Electric, Birmingham, AL, has been a family business since its founding in 1930. CEO Nancy Collat Goedecke spoke with MDM about the processes the family developed and the challenges they have overcome to keep the company healthy and thriving.This article is part of a series on succession planning in distribution.
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Improved market access can drive long-term growth in both a distributors profitability and its market share. But it requires an analytical look at customers and opportunities. This article is the final installment in our series on customer profitability analytics.
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Include critical vendors and service providers when grooming the next generation.
This report is researched and produced by MDM editors. View the Second Quarter 2016 report here.
These product groups provide a snapshot of inflation trends based on the Producer Price Index from the U.S. Bureau of Labor Statistics. Third quarter 2016 pricing levels are compared with second quarter 2016 and third quarter 2015.
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Industrial
Construction
Electrical
Other Related Electrical
Power Transmission/Bearing
Fluid Power
Plastics
Fasteners
Hardware
Tools
Gases/Welding
Paper
HVACR/Plumbing
To view this report, log-in and click on Download pdf below the product listing.
Robert W. Baird & Co., in partnership with Modern Distribution Management, conducted a survey of more than 600 distributors and manufacturers to gauge business trends and the outlook for the distribution industry in diverse sectors. Here is a summary of third-quarter results and distributor and manufacturer expectations for fourth-quarter 2016 and full-year 2017.
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Leaders disrupt their own models to meet their customers needs.
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Modern Distribution Management's monthly Industrial Inflation Index measures a cross-section of industrial supplies.
This index includes:
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After yet another quarter of revenue decline, sector finally projected to improve.
Index declined in October to 98.6, from 103.5 in September.
A joint MDM-Real Results Marketing survey revealed that distribution and manufacturing, in general, are 4.5 times less likely than other industries to be extremely satisfied with their marketing capabilities. This article examines how distributors across sectors approach marketing and what they consider the most effective channels to be.
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There are many assumptions about what millennials want from a workplace, but those assumptions may be misguided. MDM recently conducted a survey of students in industrial distribution programs at three universities about what theyre looking for in a workplace. This article examines some of the misconceptions and how distributors can adapt to the younger workforce.
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Culture is a key factor that future employees will consider. So, dont treat it as just another buzzword.
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The MDM Market Snapshot, based on data from MDM Analytics, includes market demand for Mechanics Hand Tools by end user in the U.S., plus the top end users by 6-digit NAICS.
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Year-to-date, orders are down 12.8 percent.
Index up 1.1 percent year-over-year.
More competition and a slow-growth economy in the midst of a contentious political battle have contributed to increased uncertainty about the future. This article examines some of the top concerns of distributors and manufacturers and how to overcome the fear factor created by them.
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A mobile app might not work for every distributor, but gauge your customers demand for it before deciding. This article explores how distributors can use mobile to create a competitive advantage.
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In this environment, it is easy to feel overwhelmed and adopt a cautious approach to strategies and decisions. This is the wrong strategy
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Sales and inventories data for wholesaler-distributors in July 2016.
Modern Distribution Management's monthly Industrial Inflation Index measures a cross-section of industrial supplies.
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The talent gap in distribution is widening as companies struggle to recruit and retain younger employees, but a better training process can help reverse that trend. This article examines why and how companies should remodel their training methods in todays changing marketplace.
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The distribution landscape has changed, but small businesses, particularly distributors, are still avoiding investment in new technology to adapt. This article examines the hurdles to investing in technology and how to strategically overcome them.
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Small manufacturers continue to be focused on using technology for tactical purposes rather than strategic, according to the Small Business Barometer 2016, a new report released by Exact and Pb7 Research.
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