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Home » Blogs » Management & Strategy » New Rules and Redefining Normal
Thomas P. Gale

New Rules and Redefining Normal

By    Thomas P.  Gale 
September 3, 2009
More about:  Distribution Management & Strategy,  Distribution Trends,  MDM Blog
Too many distributors and manufacturers are still trying to play by the old rules. But the old rules do not work anymore.
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I’m looking forward to moderating a panel later this month at the NAW Large Company CEO/COO Roundtable . The panel will feature three distribution executives from diverse industries who have found ways to negotiate tectonic shifts in finance, credit and customer behavior and reposition the company for the future. Their stories reflect how they have managed the necessary belt-tightening all companies have had to endure while executing strategic projects to position them for growth for that unknown but inevitable time when the economy returns to positive.

One of the panelists, Chuck Cohen of Benco Dental, shared this column by Ram Charan  that recently appeared in Fortune. It’s good reading. I know many distributors who have managed their companies based on the recommendations in this article. As we move into the still tentative signs of a recovery, they have rebuilt the platforms of their company to accommodate the new realities.
Independent distribution channels over the next 12-24 months will continue to reflect the wrenching structural changes that have pushed through the U.S. economy. Some distributors and manufacturers have focused on surgery to survive and cut too deeply into inventory to free cash. They are vulnerable to competitors who found ways to better forecast and maintain high service levels.
I’m also moderating an MDM Webcast on Sept. 15 with Mike Marks that focuses on how distributors can leverage the new realities – smaller markets, emerging niches, cloudy supplier and customer relationships, irrational rebate programs. (Register for the Webcast here.) The conversation is going to focus on how distributors are making some difficult transitions. As the Fortune column notes, the current climate actually makes it much easier to get everyone on-board to making changes. If you don’t or can’t do it now, someone will find a way to leverage the disruption taking place – with your suppliers, your customers or both.
Too many distributors and manufacturers are still trying to play by the old rules. But the old rules don’t work anymore. Successful distributors have always found ways to bend or break the rules to create value for their customers and the suppliers who actually reward them for doing more than the other 1,000 “preferred” distributors out there. Much of the value distributors have always brought to the table is their “street-level” knowledge of markets and how to fully exploit them. That part hasn’t changed; the part that has changed is what the table looks like.
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