For so many distributors, the only constant since March 2020 has been a reactionary operational state. From the time the COVID-19 pandemic arrived, there hasn’t been a lull in most markets, much less in major global economies. Just as distributors had progressed through keeping their employees safe while serving as essential businesses during 2020’s business shutdowns, supply chains became supply snags everywhere — turning inventory into a precious commodity as demand for industrial, construction and commercial products rebounded.
Simultaneously, the distribution labor situation became extremely challenging, as staff in warehouses and sales offices alike suddenly had increased leverage to pick employers they wanted, rather than out of necessity. Commentary in the 1Q22 Baird-MDM Industrial Distribution survey illustrated how distributors are struggling with job-hopping staff and competing companies’ poaching talent. “We have such a hard time retaining talent that we are unable to operate at full capacity,” one distributor said. “Experienced people can easily job shop and leave for more pay.”
Further still, distributors have been tasked with rapidly stepping up their eCommerce game, given how the pandemic accelerated customers’ preference to buy via a digital experience.
And to top it off, distributors have been hearing constant news over the past few months about a pending economic recession and industrial slowdown. Second-quarter financial results from major distributors showed demand is still strong, as did Fastenal’s August sales results; but the consensus is that a slowdown is still coming and will be felt throughout the first half of 2023.
Collectively, all of that has required constant reaction from distributors who weren’t already ahead of the curve in these areas of operational agility, supply chain, labor and digital tools. This was the focus of MDM’s latest QuickTake Podcast between our CEO Tom Gale and Indian River Consulting founding partner Mike Marks, who discussed the importance of having a “North Star” as a sense of company guidance amid all the disruption, uncertainty and noise out there in their Sept. 9 chat.
“It’s sort of the new version of ‘What do you want to be when you grow up?’” Marks said. “The North Star says, ‘What are we going to create going forward?’ Distributors have all been trained to just react to threats and opportunities. So, if you don’t have a North Star, you’ll go left because you got a good idea, and then you go right, and then you turn around and go backward. So a lot of that frenzy you’re seeing and confusion is because there isn’t really a fixed point that they’re really going to.”
Gale also drove this point home in a Sept. 8 blog that emphasized how, for distributors, a North Star — the only star in the northern sky that doesn’t move — is a guiding principle. It’s something that can lead a company’s direction instead of just throwing money at problems and challenges and expecting success.
“When you think about a North Star, it’s basically ‘Who are these customers that I’m wanting to serve, and what do they value? What did they want?’” Marks elaborated, noting that a distributor’s North Star likely for 2023 likely doesn’t look the same as it did in 2019. “And you say, ‘What am I? What are my customers going? What are the pressures they have? What are they going to value in three years?’ It’s going to be really critical. And then, ‘What capabilities do I want to build as a distributor so that, when (customers) get there, I’m the obvious choice?’”
Marks is one of the featured speakers at MDM’s rapidly-approaching SHIFT | The Future of Distribution conference Sept. 25-27 in Broomfield, Colorado. He will help kick off the thought leadership Monday morning by delivering an “Implementing a High-Performance Distribution Sales Model” session, followed immediately by moderating a “Core Principles of Successful Sales Model Transformation” panel.
Check out the 16-minute podcast via the embedded audio above, and check out all our MDM Podcasts at our webpage for them here.