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Second is the pricing squeeze distributors face as nearly all product areas are looking at price increases due to cost increases in raw materials (i.e. metals and petroleum), as well as transportation (i.e. new hours of service regulations impacting commercial drivers and fuel costs).
Add to that the impact of increased healthcare and other operating costs (i.e. energy) and it's not too hard to see why this recovery doesn't have the same horsepower of past ones.
As markets tighten and new competitors jump into your back yard, it seems there are more low-cost, low-price alternatives for customers every week. John Monoky describes perfectly the swing of the price pendulum driven by the automotive purchasing community, which seems to be at a ten-year extreme once again. He calls it extinction economics, with a definition of partnership in the automotive sector as 'you go bankrupt before me.' It's not funny if that's your market.
These are all real factors after what has been for many distributors the strongest first quarter in years, and for some of all time. The flip side of doing more with less are opportunities that come with focus on core capabilities and a smaller core of strong customer and supplier relationships. Those who focus on serving smaller markets well will do better than those trying to play all the fragmented squares. There are a lot of examples of companies doing a lot more today with less; they are just doing it smarter.