There are many reports of distributors working inventories hard to get as lean as possible without impacting customer service levels. The focus is on faster-moving items to just get smarter about turns and trim operations to free up cash. It's a critical piece of managing in this current environment.
The article in this issue by Mike Marks provides a broader historical perspective on managing through this economic cycle. Regardless of where your business stands today, it provides some good indicators for stepping back and evaluating if you have taken the steps necessary to position your company for the next three months, as well as the next 12 months.
One of the key points the article makes is that as the channel loads with inventory, the quick mover who has low inventory and tight receivables is in the right competitive position to differentiate from the market competition both through the downside as well as when the market starts to turn up. Competitors will be choking on inventory, as well as manufacturers. It's easier to maintain margins with customers who are also looking to capitalize on excess inventories in the channel. There will be opportunities for deals with better purchase pricing that the early reactor with some cash and a lean inventory can take advantage of.
While most distributors have the highest sales growth rates during boom times, so does everyone else. There is no market share change generally. The same is true at the bottom of the cycle as there is little working capital or profits to invest in chasing share and demand is too weak. It's at the changes of the economic cycle phases that share typically changes hands.