Lately the role of the distributor CFO has been on my mind. I see a need for the fundamental role of the CFO to change from staff accounting and backward-focused record keeping to something more powerful. For one thing, the importance of forward looking analytics grows in importance. Caught off-guard by the last recession, many distributors faced financial stress from systems not geared for a 20-30 percent drop in business. Aside from internal analytics, I see need for customer interaction from the financial side of the business. As an example, many of the services distributors provide create massive financial gains for their customers. Few current customer contacts understand the monetary impact of our services. Distributor CFOs must work hand in glove with their counterparts at the customer to lead the charge in establishing reliable financial metrics. I call the position the Attack CFO. I have a couple of articles scheduled to be published on the topic in trade publication...

Pardon me while I rant . One of the original self-proclaimed experts I just finished reading an article by a fresh faced, newly minted and self-proclaimed sales expert. Quite frankly, I don’t remember if she called herself a business coach, sales trainer, consultant or something similar, but her message stressed the point of helping salespeople in two ways: 1) Avoid measuring selling activities as these metrics frustrate new salespeople who struggle to get into the rhythm of setting appointments, making follow-up calls and learning about customers. 2) Measure sales output. Things like numbers of orders generated, gross margin and incoming requests for quotes. I couldn’t believe my eyes. Terrible advice, possibly the worst advice since the neighbor told Noah to expect a drought. And, the whole thing was prominently published in an online distribution magazine. Let me explain why I this frustrates me. Coaching salespeople based on their output doesn’t work. Allo...

As with all fairy tales, this one happened once upon a time in a land not so far away. There, of course, was a princess who was quite obviously a mix of hillbilly and ridge-runner descent. Her mother, in a fit of rage or depression, named her Gerpruda, Princess Priscilla Gerpruda XIII to be exact. Anyway, this Princess Gerpruda (the thirteenth) lived in Never-Never Land. (Never-Never turn down a Sales Opportunity and Never-Never think outside the box-land-that is.) Gerpruda lacked typical royal charm and beauty. At the age of 37, her parents thought an intervention was necessary to find a proper suitor. A decree was made and a call went throughout the land for a suitable prince to wed the lovely Priscilla Gerpruda. After twelve years and two months, it appeared there was truth to the rumor that all of the potential “Prince-ton” material had been turned into frogs by a neighboring wizard. In ‘88 the Wizards and Warlocks Frog Turning Competition had been held on the pala...

Nearly 20 years ago a friend made this comment: “(Industrial) customers don’t want to buy electrical products, they want to buy solutions. If you only sell half of the solution, it’s not really a solution-- it’s a bag of parts.” At the time, I was squarely in the center of the electrical automation business. And, like most salespeople, everything I didn’t sell was invisible. On a purely intellectual basis, I realized the PLCs, drives, sensors and motion control systems I sold were connected to something, but emotionally, I didn’t care. I had my bag of tricks and my team was better equipped to assist in project layout, troubleshooting and advanced support than any other electrical distributor and I was fat, dumb and happy. But my eyes were opened. I lost an order.  After the fact, my customer was kind enough to explain the reason why. It seems he felt the mechanical portion of the order was more complex than my fancy sensors. The competitor sold both and during the discuss...

Once again, the whole topic of non-competes, non-disclosures have raised their ugly legal heads. A well-known electrical distributor recently appealed a lower court decision and the case is being revisited. Based on estimates from legal experts, the attorney costs alone are most likely pushing $25-30,000 for both sides; and this doesn’t account lost time and wasted energy. I would like to go on record as stating I believe every distributor needs to have and enforce their non-disclosure agreement. In distribution, we don’t have patents, top secret ingredients or other trade secrets. Instead, we have customer contacts, supplier relationships, market price data, a keen understanding of the competitive lay of the land and emerging employees. Some of us invest massively in product training, sales and other job related skills. And, when an employee leaves, we must make absolutely certain that minimal information goes out the door with that former employee. Most think of key emplo...

The Challenge – How to Incentivize a Distributor Photo from zazzle.com Purchasing Professional After writing tons of articles on the sales process in distribution where I brutally vilify purchasing and procurement types, I received an email with the following: “Frank, you often make sweeping generalizations about purchasing types. As a former sales guy, I tend to agree with most of what you say. However, my organization (a distributor) has a couple of purchasing people. And while I certainly don’t push them to lie, cheat or steal from our vendors, I would like for them to be more proactive in helping our business make money. Do you have any recommendations for points we should intensify them on? Is it possible for them to do more than just enter orders with our suppliers?” This was a very good question and one I hadn’t thought about for quite some time. There are many purchasing folks working in distribution. These folks are critical to our organization. Most are har...

A couple of weeks ago I published an article called Pricing Professional – The time has come . The piece outlined the need for distributors to consider how they run their business and develop a new position. We hit on why the person who typically handled ‘pricing tasks’ was likely more of an administrator responsible for loading the prices of income purchases rather than a margin building professional. We pushed for distributors to consider the impact of a true pricing process and the qualities of the person best equipped to make the pricing process work. Somewhere along the way, we touched a nerve. Building a pricing process is a viewed as a top secret strategy. While a number of our readers commented, it seems no one wants to go on record with their plans. Here is a sample of the way the emails began: “Hope things are going well. While you'd probably prefer I comment directly on the post I really don't want our competitors to know we're doing this. So feel ...