The Distributor Channel

In the past couple of weeks we have noted electrical distributors making the move toward green products, industrial distributors moving toward green packaging and Distribution giant Grainger announcing that their green based products - from toilets to who knows what - selling like the proverbial hotcakes. When we think about the office environment, computers and associated equipment must be a big spend. The U.S. Government is requiring green ratings on their computer purchases in the future. And, distributors are responding. I see a day when distributors may think about employing a Distributor Specialist who supports the sales of green products. The following comes from TWICE.com (The Week in Consumer Electronics): Santa Ana, Calif. — Ingram Micro has launched a service to help resellers identify “green” electronic products. The distributor’s North American arm has updated its product database to include information from nonprofit Green Electronics Council’s Electronic Product Environm

The channel to market is rapidly developing in India. Most of the products purchased in India are still purchased through very small operations - what we (in the U.S.) would call Ma & Pa operations. But things are changing... Here are a couple of news announcements from last week that indicate things will be heating up on the sub-continent. NEW YORK (Associated Press) - Maintenance products distributor W.W. Grainger Inc. said Wednesday it has paid $5.4 million for a stake in an Indian industrial and electrical wholesale distributor. Along with the $5.4 million purchase price for 49.9 percent of Asia Pacific Brands India Ltd., Grainger put in a $1.1 million matching investment to help expand the business. Asia Pacific had revenue of $47 million in its last fiscal year ended March 31. It has 27 locations across India. And this one from ITInformation India: Power management firm Eaton Corp today said it has signed a nationwide distribution pact with Redington India to deliver its s

The year for industrial based-distributors continues to be a bit "bouncy". Power Transmission distributors lie dead center in the world of industrial supply. Their products range from belts and pulleys to complex Automation and electronic Motion Control devices. June sales trended up, other months have been smooth or slightly down. It has been that kind of year in the North American market. One very interesting development this month comes in the down turn in Variable Frequency Drives and Linear Motion products. These categories have been shining stars in past months and one can only wonder if next month will see a corresponding upturn. Here is the press release from PTDA - Chicago, Ill. — August 6, 2008 — The Power Transmission Distributors Association (PTDA) today released June 2008 month-end trend data for distributors and manufacturers of power transmission/motion control (PT/MC) products. U.S. distributors’ overall sales of PT/MC products rose 2.7 percent in June 2008 co

A week or so ago we reported that the National Association of Electrical Distributors (NAED) had hired a consultant to lead them into the "Green" market. There seems to be a great deal of interest in all things green. This report was listed in today's version of The Electrical Distributor Magazine on-line. CLAMORING FOR GREEN—an April 29 Reuters report, which TedMag stumbled across only recently, noted that “building maintenance supply company W.W. Grainger says…customers are clamoring for the energy-efficient lights, high-efficient water faucets, and even waterless toilets it sells…Grainger’s sales of such products rose 20% in the first quarter from a year earlier, compared with a 7% revenue gain overall, a company spokesman said.” I suspect that distributors in nearly every line of trade are looking for ways to put an energy saving spin onto some of their products.

This is one of those good news bad news stories for wholesalers. The US Census is reporting that manufactured goods are tracking upward. This no doubt leaves many distributors scratching their heads. If you happen to be an Electrical Distributor, Automation Supplier, or HVAC Distributor you will be particuarly interested in this. Here are a few of the headline statistics: 08/04/08 – New orders for manufactured goods increased $7.6 billion or 1.7 percent to $457.6 billion in June, the U.S. Census Bureau reported. This was at the highest level since the series was first stated on a NAICS basis in 1992 and followed a 0.9 percent May increase . But the real story is in the details of the report. Take just a moment to check out the report located here . Check out the numbers for these items Industrial Machinery - Shipments down 6.2% Electrical Equipment - Shipments nearly flat Electrical Lighting - Shipments down 10.8% And no surprise here - Light Trucks and Utility vehicles down 20%

We have long pushed for Distributors to get involved in the training business. This is especially true for those wholesalers involved in technology oriented businesses. But allow me to add a point of clarification here; when many think of technology they think of Silicon Valley - computers, data-communications and the like. Technology is nearly anything that changes and needs a bit of training to understand. Distributor members of HARDI, NAED, PTDA, AHTD, NIBA, SEDA and others should be considering training as a potential source of revenue. We believe that Distributor Specialists need to be involved in the training. Many upper quartile distributors have already figured this out, others are quietly ramping up their efforts. A resent survey conducted by accounting firm, RSM McGladrey, detailed the need for skilled workers. “One in five companies cannot find the workers they need for today’s advanced technology manufacturing and wholesale distribution environments,” said Karen Kurek, mana

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 collecti

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

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.

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

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

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 wa

Bad times lay just ahead... or at least so goes much of the economic news these days. Distributors across most lines of trade are being told - 2008-10 will be the Katrina of Economic low pressure cells. Yet MRO giant W. W. Granger has announced the end of a pretty good February. 2008 vs 2007 February Sales by Segment listed as: Grainger Branch-based +6 % Acklands - Grainger (Canada) +25 % Lab Safety Supply +3 % What does this mean for other distributors? Well, it gives you a benchmark to compare your business against a known commodity.

Some companies are technology friendly and some are not. Last month I had the opportunity of visiting one of those very friendly and rare early adopters. They are wholesalers-make no mistake about it. Their building says distributor. Observing the first two or three folks walking in the door in the early morning hours, it seemed like any other wholesaler in America. But once in the door - things were different. Very noticably, every person had two monitors on their desk. I've seen this set-up in software developer's offices and in the system administrator's cube at another client's office. But here everyone uses two screens. I asked why and they told me, information is their competitive edge. And, adding a second monitor was the best productivity investment on the market. I immediately purchased a second monitor and put it to the test myself. After a couple of days "getting the hang of it", I found myself effortlessly moving back and forth from web to word doc

For the past few years I have encouraged distributors to get into the training business. In spite of their best efforts, community colleges and other traditional technical training organizations continue to fall short of the needs of our customers. They have a difficult time hosting anything besides the most fundamental of courses – technology manages to keep just a few car lengths ahead of them. There is a growing demand for training. To illustrate this point, the US Department of Labor recently announced that America will need to train more than 270,000 new electrical workers by 2016. This statement mirrors those made related to a number of other skilled trades. No one understands the local needs of customers like distributors. Often distributor Specialists have not only a working knowledge of products, they have deep understanding of the problems faced by their customers. I believe using Specialists to conduct training offers a number of benefits: 1. Students (customers) h

Today everything is turning green. Gigantic companies (like GE) are spending barrel loads of money to convince the public that they are a green company. I personally believe the path to a "Greener" tomorrow comes via economics. Gas prices at $3.20 a gallon have done more for fuel efficient car sales than a zillion dollars in ad campaigns. Early on in the advent of compact florescent lighting - Distributor Product Specialists did a grass roots effort to convince business to switch to compact lighting. It made economic sense and the Specialist proved it to customers one by one. The same thing happened with recycling of mercury content from lamps. It was driven by wholesalers and driven in the right direction. Today, much of the "green lighting" is coming from Asia. It has been mandated and some silly decisions are being made. Check out the recent article in the Wall Street Journal for more..... http://online.wsj.com/article/SB120114002163112121.html?mod=home_

Economist Alan Beaulieu (of the Institute for Trend Research) has shared his thoughts of a frightening Recession in 2009-2010 throughout distributor channels. During Fall 2007, I was privileged to hear him speak on three separate occasions. Based on my own observations (and I'm not an Economist), the smart money is on Alan. When I spoke to folks immediately following his talk, everyone was committed to putting together a plan to safely steer their business out of harm's way. Now - just 3 months hence, nobody has done anything substantial. Oh, they may say we are watching things closely. But ask a couple of questions and you see lots of hand waiving and excited double speak. What should we be doing? Here are a couple of thoughts: Do you have a plan to keep afloat even if business drops 10-15%? What could you cut without cutting into muscle and sinew? What is your sales team doing now that is more efficient than last year? What is your warehouse doing to monitor inventory as