Wednesday, July 30, 2008

Point of Sale Data - Not used?

One point of discussion among distributors across all lines of trade comes under the heading of POS data. Distributors find themselves being muscled into providing POS data which is expensive (because every manufacturer wants it done differently) and distracting. In a recent informal poll conducted by this office, most distributor sales managers could think of just one or two suppliers who provided them with a reasonable clue that POS data was being used for anything worthwhile. A recent survey completed by Pembroke Consulting backs up this largely anecdotal story.

Distributors and their partners need to get together on this. Sending data "over the wall" where it is not properly used is only friction in the channel. AHTD, PTDA, NAED and a number of others have developed POS guideline models that need serious consideration.

A survey recently completed by Pembroke Consulting uncovered a "surprising number" of companies, still using manual systems for collection and analyse of sales data. They looked at the practices of more than 100 technology, manufacturing and pharmaceutical companies. Though these companies sell 80% of their business through distribution channels, more than half have yet to automated channel data.

The channel data automation study, asked managers and executives - their most common data management problems:
  • Receiving incomplete data from (their) indirect channel
  • Basing future sales plans on ‘best guess’ estimates”
On average, these companies have more than 165 distributor and other channel partners.

The study also found that, among companies who manually process data:

  • 72% frequently or very frequently discover discrepancies between internal sales data and the data collected from indirect channel partners
  • 72% said sales data is frequently or very frequently not ready quickly enough to be used for sales planning
  • 78% frequently or very frequently makes sales plans based on “best guess estimates” rather than actual sales data

Tuesday, July 29, 2008

Electrical Distributor Explore the Green Market

The National Association of Electrical Distributors (NAED) has announced a major new initiative to position their members as a viable source for "Green Stuff". There will be competition...
Electrical Distributors made a similar play with data-com related products in the mid-90's with a large degree of success.


July 29, 2008 -- Jerry Yudelson today announced the beginning of a major new research study, "Energy Efficiency and Green Building Business Opportunities," for the St. Louis, Missouri-based National Association of Electrical Distributors (NAED) Education & Research Foundation.

Green Building Consultant, Jerry Yudelson, "Green building and energy efficiency markets are growing by leaps and bounds, more than 50 percent per year. We're taking a long look at the potential for major new technologies and new business opportunities in the electrical equipment side of the green building industry." Citing industry statistics that show nearly 75 percent of all electricity produced in the U.S. goes into residential and commercial buildings, Yudelson said, "Marketing innovations in this industry are critical to reaching our goals of reducing energy use and greenhouse gas emissions from buildings."

Ed Orlet, research director of the NAED Education & Research Foundation, said, "We know that this study will allow us to help our members find profitable new business opportunities in the rapidly growing green building industry. Yudelson Associates will come up with a broad-based industry analysis and a profile of the most immediate market opportunities for the electrical distributor." We hope to outline not only the market growth and profitable openings for electrical distributors, but also the best practices in responding to them Helvetica, sans-serif; TEXT-DECORATION: none" href="http://www.greenbuildconsult.com/" alt="Link to website">.

Monday, July 28, 2008

Some Companies are Growing and Integrated Supply

The trend for mega-distributors reporting growth continues. Wesco reports growth for second quarter 2008 at a time when many distributors are reporting down years. Since the construction industry is "in the tank" one can only assume that Wesco's Integrated Supply initiatives contine to gain traction..

WESCO Sales Grow 4.6% in 2Q
WESCO International, Inc., Pittsburgh, PA, provider of electrical MRO products, construction materials and advanced integrated supply services, reported sales of $1.59 billion for the second quarter 2008, an increase of 4.6% over second quarter 2007. Profit was $60.1 million, a slight increase over the same period a year ago.

Sales for the six months ended June 30, 2008 were $3.05 billion, a 2.8% increase over the first six months of 2007. Sales growth was 4.6% after adjusting for a previously announced divestiture. Profit for the 2008 year-to-date period was $105 million, a 2.6% decrease from same period last year.

Sunday, July 27, 2008

New Integrated Supply Report: Implications for Distributors

Integrated Supply and related supply contracts are something every distributor and their partners need to prepare for in the future. Distributors have been on the front line of the integrated supply initiative. The large national wholesalers have a bit of a leg up on the rest because of their ability to provide consistent pricing and unified billing across many facilities and large geographic areas. But often the national distributors miss the mark on service, especially on technically-based products (Automation, Motion Control, Sensors and other lines). SupplyForce and Vanguard National Alliance have come up to meet the challenge on behalf of the smaller independent regional and local distributor.

Clearly this is an area where distributors and their vendor partners need to work to make the flow of products as seamless as possible for the customer.


More details from the report:


Recently (7/22/08) Frank Lynn & Associates released the results of their latest study on Integrated Supply. Integrated Supply and related hybrids are now responsible for over $14B of the MRO spend in the US, according to the report. Further, this represents over 20% of the large industrial end-user's MRO spend.

Report findings suggest that over 80% of suppliers are now using integrated supply chain routes to market and 78% believe hybrid channels, including integrated supply models, will continue to expand. Over 60% of suppliers who have targeted these new channels report having been successful in expanding sales through them. The report, compiled from interviews with more than 200 sales, purchasing, product and marketing managers and business owners, shows that traditional contracts account for roughly half of the $14 billion spent annually on integrated supply. Limited on-site contracts account for about $3 billion more, with the remainder, about $4 billion, going to third-party logistics and other outsourcing providers.

Saturday, July 26, 2008

Motion Control and PTDA

PTDA (Power Transmission Distributors Association) style distribution accounts for a large and growing segment of the Automation/Motion Control type of business. Early this summer we contributed an article to Automation.com which disclosed the research conducted by River Heights Consulting. According to our numbers PTDA did over $800 Million in Motion Control business.

This demonstrates a fact that many of us have known for a long time, the manufacturing community in North America doesn't want a half dozen seperate suppliers (electrical, mechanical, hydraulic, motors, safety, etc.). They want one company capable of providing solutions.

Here is a related announcement from PTDA:

New Motion Control Technical Conference Provides Learning Opportunity for Technical Specialists

Chicago, Ill. – July 24, 2008– The Power Transmission Distributors Association (PTDA) will present the first Motion Control Tech Conference at the 2008 Industry Summit in Miami Beach, Florida on October 31, 2008. The Motion Control Technical Conference will be the premier event for technical specialists in the power transmission/ motion control (PT/MC) industry to learn about motion control trends and technologies.
Successful distributors strive to build a competitive advantage in their marketplace. They continuously seek new ways to leverage the potential of their people and process. The Motion Control Technical Conference provides an excellent opportunity to combine technical expertise with PTDA-style networking.
The conference will provide an opportunity for Technical Specialists—who support the growth of PTDA distributors on a day-to-day basis—with an overview of the latest trends in motion control. The conference will feature six unique technical speakers, each offering a glimpse into a particular segment of the motion control industry. Topics include:
· Trends in Motion and Automation, presented by GE-Fanuc.
· Communications in Automation, presented by Eaton Corporation.
· Linear Motion Components to Systems, presented by Thomson and Kollmorgen.
· The State of Linear Motion – A Tutorial, presented by Festo.
· Mechatronics – The Past and Future, presented by Yaskawa.
· How to Engage Integrators in Motion, presented by Norm O’Leary of Control Systems Integrators Association.
This unique event brings together the very people who drive a big piece of this rapidly emerging market. Part forum, part technical benchmarking, and all focused on the latest trends and information in the motion control arena. To register for the Motion Control Technical Conference, visit www.ptda.org/industrysummit.
Founded in 1960, the Power Transmission Distributors Association (PTDA) is the leading association for the industrial power transmission/motion control (PT/MC) distribution channel. A U.S.-based trade association, PTDA represents 205 power transmission/motion control distributor firms with over 3,500 locations throughout North America and 12 other countries as well as 194 manufacturers that supply the PT/MC industry.

PTDA is dedicated to providing exceptional networking, targeted education, relevant information and leading-edge business tools to help distributors and manufacturers meet marketplace demands competitively and profitably. For more information, visit www.ptda.org.

Friday, July 25, 2008

Not all Doom and Gloom Continued

Distributors around the country are reporting mixed results. Before convincing yourself the whole industry is tracking downward, you should check the latest results of a few of the big boys. Motion Industries just reports a 7% sales gain. Grainger 10% sales gain.
I invite my readers to take the recession proof pledge.

"I promise to make sure my competitors have a recession - not me"


Motion Industries Sales Up 7% in 2Q
Genuine Parts Company, Atlanta, GA, reported sales of $2.87 billion for the second quarter ended June 30, 2008, up 4% from the prior-year period. Profit for the quarter was $133.1 million, up 2%.EIS, the Electrical Group, recorded sales growth of 11% for the quarter. Motion Industries saw a sales jump of 7%. And the Automotive Group reported a 2% sales increase. S.P. Richards, the Office Products Group, reported flat sales relative to the second quarter last year.For the first six months, sales were $5.61 billion, up 4% from the same period in 2007. Profit was $256.6 million, an increase of 2%.

Grainger sees 10% sales growth amid slowing economy
NAW SmartBrief 07/18/2008
Second-quarter profit for Chicago-based W.W. Grainger rose 8% from the year-ago period from $105 million to $113 million, buoyed by a 10% growth in sales in that span. "We are making market share gains in a slowing economy," President-CEO James T. Ryan said. Daily Herald (Chicago) (07/16) Modern Distribution Management (07/15)