January 10, 2013 - Modern Distribution Management

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January 10, 2013

Analysis: Sales Grow, But Distribution Profits Stagnate

The following analysis by long-time industry expert Al Bates examines key profit drivers in wholesale distribution across 40 lines of trade monitored by the Profit Planning Group. This article looks at historical data from the past five years, and particularly trends in 2011, the last year for which full data is available. The pattern that year is a marked deviation from what was seen in previous business cycles.

This article provides insight into this trend and provides recommendations to improve profitability, including the single most important issue distributors should address in 2013.

Bates is author of Triple Your Profit!, available from MDM at www.mdm.com/tripleyourprofit.

Prior to 2011, distribution firms followed a somewhat predictable pattern in relationship to the economy. As the economy entered a recession, sales and profits tumbled. Coming out of the recession, both sales and profits improved dramatically. This pattern changed in 2011 (the last year for which information is available). Sales increased sharply, but profits did not. To understand why, it is necessary to examine the key profit drivers of distribution – the factors that put profit on the bottom line the quickest.

The key profit drivers in distribution are:

Analysis: Sales Grow, But Distribution Profits Stagnate Read More »

MDM Reader Survey: Top Distributor Concerns, Plans for 2013

A recent survey by MDM in partnership with NetSuite asked wholesale distribution companies about their key concerns and priorities going into 2013. This article provides a summary of the results and highlights key trends for the next year.

The latest MDM Annual Reader Survey, conducted in partnership with NetSuite, revealed a diverse set of concerns and priorities for 2013. Revenue growth remains the top priority for many distributors and manufacturers, with more than half of survey respondents (55 percent) listing it as a top priority for 2013, about the same as last year.

Selling more to existing customers

MDM Reader Survey: Top Distributor Concerns, Plans for 2013 Read More »

Commentary: Fragmented Markets Bring Opportunity in 2013

As I begin my 21st year with Modern Distribution Management, I’m struck by the continued degree of fragmentation in wholesale distribution. That may run counter to conventional wisdom as we have entered another strong cycle of consolidation and M&A activity.

But it only takes a brief review of MDM’s Top 40 Industrial Distributors Market Leaders list to realize how diverse

Commentary: Fragmented Markets Bring Opportunity in 2013 Read More »

ISM Semiannual Forecast: Capital Spending to Grow by 7.6% in 2013

Economic growth in the U.S. will continue in 2013, say the nation’s purchasing and supply management executives in the December 2012 Semiannual Economic Forecast from the Institute for Supply Management. The manufacturing sector expects revenues to increase in 17 manufacturing industries in 2013, and the non-manufacturing sector predicts that 14 of its industries will see higher revenues.

Capital expenditures, a major driver in the U.S. economy, are expected to increase by 7.6 percent in the manufacturing sector and by 7 percent in the non-manufacturing sector. Manufacturing, however, expec

ISM Semiannual Forecast: Capital Spending to Grow by 7.6% in 2013 Read More »

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