High Velocity Radio Interview Posted using ShareThis

Radio isn't what it used to be. The following is an excerpt from a half hour interview I recently did for High Velocity Radio. Listen to it here. If you would like a full copy of the interview on a disk that you can listen to in your car, email us. It is absolutely free.

The distribution business has a beast looming in the back of the closet. It lurks in your inside sales group, thrives in your sales department and sucks the life’s blood from your bottom line. What is this savage? It’s the practice of cost-plus pricing. Every industry has one - for the electrical wholesaler it’s cost plus 20, or others it’s cost plus 10, 20, 25 or 30%. As an industry we have talked about cost-plus pricing for decades, yet it manages to survive. If your organization doesn’t have a clear cut process for pricing, it’s still hiding in the deep recesses of your company. And, it needs to be killed – before it kills you. Here’s how it works. A customer calls in and asks one of your employees for price and availability on a product. Somehow, someway they believe the ‘system price’ shown on the computer is too high, inaccurate, not supported or non-stock. They quickly look up your cost and then - the monster appears. Instead of measuring the cost of ordering, fr...

Think about the Great Ice Age – before the great sheets of ice enveloped much of Europe and North America, great Dinosaurs roamed the planet. After the ice cleared away a new breed of highly adaptive animal took over – the mammal. Without being overly graphic, this hardy new breed later gnawed on the frozen bodies of the regal creatures that once reined supreme. The Ice Age was a game changer. Recessions are game changers. What worked on one side of the recessionary dip will not work on the other. I have been challenged to outline some of the metamorphosis associated with the other side. Earlier this week, I exchanged a few thoughts with Craig Justice of Alliance International on “the funded head”. Mr. Justice, wrote a blog covering his very successful experience with the concept click here . Because Mr. Justice lives in the wine country high on a mountain in rural San Diego County California, I conjure up thoughts of vintage Orson Wells stating “We sell no wine before its tim...

Changes in the Distributor Environment Earlier this week I was asked about some of the unrecognized effects of the recession on wholesale distribution. Then the question came up a second and third time in a matter of hours. Apparently, this is the time for reflection. Besides creating stress for business people – recessions drive the acceleration of change. I thought it might be interesting to use this forum as a vehicle for exploring some of the generally uncovered changes in our industry and their ramifications. Change Number One (not necessarily in any order) The super “skinnying” of Vendor / Supply partner sales teams Think about your vendors. In some industries it’s getting darn difficult to keep track of the players. Downsizing, right sizing, whatever you call it – distributors are reporting major changes in the sales teams who support their efforts. If the manufacturer had 5 guys in an office serving the market, today there are three people working out of their houses. ...

What drives competitive advantage? Affiliated Distributor members regularly outperform the general market. Something like "8% greater growth than the market year over year" has been reported. AD uses incentives to encourage their members to build a proactive sales process. Things like vendor planning sessions, targeting competitive accounts and use of modern techniques in the daily operation of the business all come to mind. AD distributors were among the first to use electronic and email communications back in the 1990's. Any reasonable person involved in Distribution understands that we have a problem with data synchronization. As we move into the future, data needs to migrate from manufacturer to distributor to customer and back again - seamlessly, efficiently and without costly human interface. I believe that any distributor who develops this skill ahead of the market will have a competitive advantage. And, this advantage will turn into market share on the oth...

--> It’s happening more and more. Distributors and their Supply partners are negotiating special pricing agreements . In some segments of the Electrical Distributing business over 80% of the product sold goes out the door at a price which is below “normal distributor price”. The process usually works like this: The distributor buys a product for full price - Puts it in his warehouse – then sells the product below full price. After the sale, the distributor submits a report to the manufacturer and is issued a rebate/credit. We grew into this pattern little by little. We started off with a few agreements and a couple of catalog numbers. In today’s market, cash is becoming an even scarcer commodity and this practice often involves tens of millions of dollar. A study conducted by The National Association of Electrical Distributors sited that many distributors do without this cash for over 30 days. Often this comes about because the distributor has a poor process. To add ...