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Day: October 10, 2008

State of the Distribution Software Industry, Part 2: Software as a Service Gains Ground

This is part of a series looking at the distribution software industry. This article examines the pros and cons of Software as a Service, a model of software deployment where the distributor, for a monthly fee, accesses a business application over the Internet.
 
In an industry where margins are tight, upgrading technology is often put off until absolutely necessary. High upfront costs and licensing fees for new products deter many businesses from making an investment. But a recent trend -Software as a Service -may be opening doors for even the smallest of distributors to buy into new technology.
 
Not everybody believes that Software as a Service, or SaaS -a model of software deployment where an application is hosted as a service and accessed by the ...

Avnet Offers to Buy Abacus Group

Avnet, Inc., Phoenix, AZ, has offered to acquire U.K.-based Abacus Group PLC, a distributor of electronics components in 10 European countries, for £42.2 million ($73 million) in cash. In addition, Avnet would assume net debt from Abacus of £62.9 million ($108.8 million). The deal is subject to approval by shareholders of Abacus, and was recommended by the company's board.
 
Harley Feldberg, president of Avnet's Electronics Marketing group, said: One of Electronics Marketing's key growth strategies has been to expand our interconnect, passive and electromechanical business in all regions. The acquisition of Abacus represents an acceleration of that strategy in EMEA as it will double our IP&E sales and bring value added capabilities to our regional ...

August Wholesale Revenues Down 1% From July

The U.S. Census Bureau announced that August 2008 sales of merchant wholesalers, except manufacturers'sales branches and offices, after adjustment for seasonal variations and trading-day differences but not for price changes, were $404.9 billion, down 1.0 percent from the revised July level, but up 13.4 percent from the August 2007 level.
 
The July preliminary estimate was revised downward $1.7 billion or 0.4 percent. August sales of durable goods were down 1.5 percent from last month, but were up 5.5 percent from a year ago. Compared to last month, sales of hardware, and plumbing and heating equipment and supplies were down 6.5 percent and sales of lumber and other construction materials were down 5.2 percent.
 
Sales of nondurable goods were down 0.6 percent ...

Global Forecast: Elevation of Risk Aversion Becomes ‘Economically Threatening’

The crisis of confidence in the American financial system has catalyzed a chain reaction of financial and political events, stunning global investors and creating a magnitude of uncertainty surrounding the near-term global outlook, according to a new report.

In the MAPI Quarterly Forecast of U.S. Exports, Global Growth, and the Dollar:  Fourth Quarter 2008 Through Fourth Quarter 2009, economist Cliff Waldman writes that some elements of the mid-September drama were simply steps toward the full and inevitable restructuring of a financial industry that had failed to appreciate and adjust for the systemic risks posed by the securitization mania of the last 20 years or more.  But the dramatic elevation of risk aversion has become economically threatening.

MDM October 10, 2008

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Distribution Financial Metrics and Trading Multiples

This table highlights key financial metrics and trading multiples for 30 publicly traded distributors in the industrial and building products industries up to Sept. 30, 2008. Download this data below. Also find graphic illustrating median EBIDTA multiples for the same distribution companies.

 

These materials, prepared by Robert W. Baird &Co. for MDM, are for informational purposes ...

MDM Inflation Index: August 2008

Modern Distribution Management's August Inflation Index, which measures a cross-section of industrial supplies, was up 0.59% from the previous month, and up 6.28% from August 2007.
 
Summary of MDM Inflation Index for the past 12 months:

 
August 2008 Index 290.5
July 2008 Index 288.8
June 2008 Index 285.3
May 2008 Index 283.7
April 2008 Index 282.4
March 2008 Index 281.1
February 2008 Index 279.0
January 2008 Index 277.2
December 2007 Index 275.9
November 2007 Index 274.7
October 2007 Index 273.6
September 2007 Index 273.5
August 2007 Index 273.3

Please click below to view a print-ready pdf of the MDM Inflation Index for August 2008, listing the 10 individual product categories that make ...

News Digest 3819

The subsidiary of Kaman Corp., Bloomfield, CT, Kaman Industrial Technologies Corp., has acquired Industrial Rubber and Mechanics, Inc. of Puerto Rico. INRUMEC will become part of Kaman's industrial distribution segment. INRUMEC is a distributor of fluid power products; industrial and hydraulic hoses; belting and conveyer systems; pipe, tube, fittings and valves; and packaging machinery to such diverse markets as food, beverage, pharmaceutical, cement and aggregate. The company is also a manufacturer of hydraulic hose assemblies for the same end markets. More
Valley National Gases, LLC, Independence, OH, has agreed to acquire General Welding Supply, Martins Ferry, OH, and its affiliates. Valley ...

Drago Supply Sees Opportunities to Grow Under Motion Industries

Drago Supply Company's acquisition by Motion Industries, announced in September, will help the regional distributor expand nationally, according to Executive Vice President Sam Drago. Before the acquisition, Drago, based in Port Arthur, TX, serviced the Texas-Louisiana Gulf Coast, East and Central Texas, Louisiana and Arkansas.
 
National accounts that were once too big for us to handle as a regional distributor are now very interested in talking with us,"Drago says. "Being a part of Motion Industries has already given us a marketing clout and visibility we've never enjoyed before. We like that. … We hope this acquisition provides us the opportunity to take Drago Supply national and even global."
 
Drago Supply has seen a 17 percent increase in sales in 2008, ...

Commentary: 3PL Survey Offers Insight for Distributors

Results from the 2008 3PL Provider CEO Perspective"surveys were presented recently at the Council of Supply Chain Management Professionals Annual Global Conference in Denver. The findings offer some interesting parallels to what distributors are experiencing.
 
Incorporating insights from 20 CEOs in North America, 10 in Europe and nine in the Asia-Pacific region, this year's research showed some of the lowest industry revenue projections in the history of the surveys. Sponsored by Penske Logistics, the surveys found the "greening"of supply chains and the 3PL industry, as well as continued pricing pressures among the top industry trends, and cited rising fuel prices and a slow-growth economy as key challenges facing the industry. A trend toward reverse globalization was also ...

Anixter Follows Customers Overseas

Anixter International has recently made three acquisitions - two overseas and one in the Midwest. Here's what the distributor's CFO says about the company's growth plans.
 
Expanding a company through acquisitions is about more than just growing in size, says Dennis Letham, CFO of Anixter International, a distributor of communication products, electrical and electronic wire &cable, and fasteners. It's about growing in the right place at the right time in the right way. And, the Glenview, IL-based distributor has been finding those opportunities in many places in recent months.
 
Since the beginning of August, Anixter has made three acquisition announcements in the U.S., Mexico and Europe. Though Letham says the timing of the announcements was completely ...

How to Counter Objections to CRM

This article looks at how to best communicate the benefits of CRM to your sales force.
 
According to the best research I can find, roughly two-thirds of Customer Relationship Management (CRM) implementations fail. How can this be? After so many years, why haven't sales leaders and CRM vendors figured this out?
 
On days when my patience is running short, my list of three CRM-Killers consists of resistance to change, intellectual laziness and fear of being exposed as not quite the sales superstar everybody thinks I am. On one level, this is right on target, and as a member of a sales team, you'll be well-served to keep this 2X4 upside the head"style list in mind.
 
At a more pragmatic level, though, it's more helpful to think in terms of ...

Trends in Warehouse Management

The Warehouse Management Systems market is growing rapidly, as technology has scaled to meet the needs of even the smallest distributors. This article looks at trends in WMS.
 
The Warehouse Management System (WMS) industry is facing a technology refresh,"driving many companies to upgrade systems they may have been using for more than a decade. "The old technology just isn't available anymore,"says Steve Banker, service director for Supply Chain Management at the ARC Advisory Group.
 
WMS functionality has advanced well beyond inventory lists and tables. The increased pace of technology has also expanded access of Warehouse Management Systems to more small wholesaler-distributors. As a result, WMS sales in wholesale distribution are projected to grow at a ...

U.S. PT/MC Distributor Sales Fall 1.4% in August

U.S. distributors'overall sales of PT/MC products fell 1.4 percent in August 2008 compared to July 2008, according to the latest month-end trend report from the Power Transmission Distributors Association. When matched up against sales in the same month last year, sales in August 2008 were also down by 1.2 percent.
 
Accounts receivable collection days increased 1.8 percent since July 2008. The confidence index of U.S. distributors for August rose 0.2 points to 5.6 (on a 10-point scale).
 
Canadian distributors reported an 11.4 percent loss in sales in August 2008 compared to July 2008. Sales over the same period last year were down 7.0 percent. Accounts receivable collection days rose dramatically, by 11.4 percent compared to July 2008. In August 2008, the ...