May 25, 2008 - Modern Distribution Management

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May 25, 2008

Competitive Advantage in MROP

Case Studies: Hard Dollar Savings in MROP
Case Studies: Soft Dollar Savings in MROP

The procurement of maintenance, repair, operating and production supplies (MROP) accounts for 20 percent of total spending in an organization, but consumes about 80 percent of the time, effort and expense in purchasing, according to The 20% Solution: A Practical Guide to Dramatic Cost Reduction in MROP Procurement, a new book by industry veteran Joel Roth. This article contains excerpts and case studies from Roth's book.

Roth says that very few organizations have analyzed and identified improvement potential in MROP procurement beyond price quotes. However, ...

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Case Studies: Saving Hard Dollars in MROP

Case Studies: Hard Dollar Savings in MROP
Feature: Competitive Advantage in MROP

There are many paths to reducing "hard-dollar"invoice expenditures for MRO materials. Here are examples of some of those provided in The 20% Solution:
Special Negotiated Discounts -To negotiate the best deal, it is essential to understand the needs, problems and objectives of each party. Example: An earth products processor required special cartridge filters for its calcining and grinding equipment.

These filters were ordered 20 at a time, at a cost of $450 each, plus freight and emergency premiums due to long lead times and lateness in ...

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Case Studies: Saving Soft Dollars in MROP

Case Studies: Saving Hard Dollars in MROP
Competitive Advantage in MROP

Purchase order costs include the entire procurement cycle: requisitioning, sourcing, placing the order, expediting, receiving, transporting, stocking, paying and so on. There are numerous soft-dollar savings that distributors can help their customers achieve, including bar coding, storeroom management, vending machines and electronic customized catalogs.

Potential cash flow and other improvements may very well exceed hard dollar savings potential. Here is one example outlined in The 20% Solution:
Consolidated Invoicing -The vast bulk of work performed in most ...

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Go Beyond `Brochureware’ Online

Web sites are becoming increasingly important for distributors as a way to connect with customers and provide valuable information about products and services. This article looks at how you can build a simple but effective site that allows you to interact with and inform potential and existing customers.
Building an effective Web site is not about selling online. It's about providing another avenue for customers to connect with your company. So say experts in Web site development and optimization, as well as in the distribution industry.

Increasingly, Web sites are becoming more important to and expected by customers as they seek to learn more about your capabilities and potential fit as a supplier.
Go beyond brochureware"-using just a picture of ...

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Robert C. Fernley of Association Management Firm Fernley & Fernley Dies at 85

Nationally recognized association executive Robert C. Fernley, 85, died May 8. Fernley was Chairman of the Board from 1962 to 1988 of Fernley &Fernley, a fifth-generation association management firm now run by G.A. Taylor Fernley.

The firm was started by T. James Fernley, a hardware wholesaler, in Philadelphia. T. James'son, Thomas A. Fernley Sr., joined his father when, in 1909, a number of other national associations approached them to serve as their organizations'management team. Fernley &Fernley manages several distribution associations, including the Industrial Supply Association and the Gases and Welding Distributors Association. The Association Management Company Institute presented Fernley with its Distinguished Service Award in 2004.

Fernley was active in ...

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Tornado Hits Distributor’s DC

Early in the morning May 9, Industrial Distribution Group's Belmont, NC, distribution center was hit by a tornado. The distributor suffered an estimated $5 million to $7 million in damages, CEO Charles Lingenfelter told MDM.

The office building, a separate facility, was not hit, but the distribution center was severely damaged. Inventory was damaged by water and flying debris. Fortunately, nobody was hurt because the tornado hit in the middle of the night.

Lingenfelter estimates it will take a minimum of four to six months to repair the facility in part due to lead times on required materials.

Until then, the distributor is utilizing a temporary distribution facility about four miles away that local officials helped the distributor find. IDG has had to ...

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Tightened Credit Markets, Economy Play Role in Bidding War for IDG

The tightened credit markets and the economic downturn were center stage in the bidding for Industrial Distribution Group Inc., Atlanta, GA, according to a proxy statement recently filed by IDG with the SEC about its plan to be acquired by Luther King Capital Management.

In fact, Platinum Equity, which was originally the winning bidder for the industrial distributor, had first bid $12 a share in December 2007 but reduced its offer to $10 a share in mid-January. The private equity firm cited risk in improving IDG's MROP and integrated supply business due to an overall decline in the industrial economy.

This prompted investment banking firm Robert W. Baird &Co. to go back to five bidders for new written proposals. Among the five bidders was WESCO, who showed an interest in ...

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First-Quarter Machine Tool Consumption Up 36.7%

March U.S. manufacturing technology consumption totaled $544.62 million, according to the American Machine Tool Distributors'Association, and the Association For Manufacturing Technology.

This total, as reported by companies participating in the USMTC program, was up 84.4 percent from February, and up 36.1 percent from the total of $400.19 million reported for March 2007.

With a year-to-date total of $1,183.75 million, 2008 is up 16.4 percent compared with 2007.

These numbers and all data in this report are based on the totals of actual data reported by companies participating in the USMTC program.

The March consumption numbers, as well as the first quarter as a whole, clearly demonstrate that the investment incentive stimulus package along with ...

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MDM News Digest 3810

Wolseley plc, distributor of plumbing and heating products to professional contractors and a supplier of building materials, reported overall that sales for the first nine months ended April 30, 2008, were up 2 percent and profit fell 23 percent. As a result of what the distributor called tough market conditions, Wolseley has made further cost reductions in North America since April 30, 2008. The distributor has closed 75 branches and reduced headcount by 200 at Ferguson and closed or consolidated an additional 15 locations in Canada, with a reduced headcount of 50 people. More
Womack Machine Supply Company has acquired California-based Applied International Motion LLC. The addition of ...

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Commentary: Enlightening MROP Procurement

Distributors have ample opportunity to take the lead (and build stronger customer relationships) in creating leaner and more productive supply channels. Author Joel Roth says he wrote The 20% Solution, some of it excerpted in this issue, to address the frustration of purchasing professionals who have difficulty dealing with MRO procurement. He gives the following recent example of how corporate buyers can go amiss:

A well-known international manufacturer of building materials tried for 15 years to install an effective integrated supply program for MRO. Three costly attempts failed. Their fourth attempt led to the following Request For Quotation: Time allowed for bidders to respond -13 working days. Total corporate spend on miscellaneous mill supplies -$1.2 million ...

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