In November, Roy Vallee, executive chairman of electronics distributor Avnet (NYSE: AVT), will retire after 35 years with the company. He served as president and COO from 1992 until 1998, when he was promoted to CEO - a position he held until July 2011. During his tenure, Vallee saw Avnet grow from a $2 billion company to a $26 billion company. Vallee recently spoke with Associate Editor Jenel Stelton-Holtmeier about his career at Avnet and the role acquisitions played in the success of the distributor.
MDM: Avnet's growth is in large part attributed to its acquisition strategy. But integration can sometimes be a challenge - finding a balance between maintaining the culture and what attracted Avnet to the company while at the same time making the acquired company a part of Avnet. How did Avnet achieve success with this? And how can other companies make it a smoother process?
Roy Vallee: We did our first large-scale integration back in 1993. And we had to figure out then the best way to deal with it. But one of the first things we decided was that we'd document the process that we used so that with our next acquisition, we could ...
In the recent MDM-Baird Distribution Survey, we asked readers how satisfied they are that their current sales compensation plans support their business objectives. More than 60 percent responded that they are very or pretty satisfied (ranking of 6-10 on a scale of 10) that their plans aligned with their business objectives. (Full results are presented in graphics throughout this article.)
About a third responded with a rank of 5 or below, implying that they are somewhat or very unsatisfied with the performance of their current sales compensation plans.
“They are working into a headwind, because their sales compensation plan is not supportive of what they are trying to do at a company level,” said Mike Emerson, co-author of the new book from the National Association of Wholesaler-Distributors, Effective Sales Incentive Design for Distributors: What’s the Right Plan?
Editor Lindsay Konzak spoke with Emerson about the book, what distributors need to do before embarking on a redesign of their sale compensation plans, what the most common challenges are when doing so and how distributors can take steps in the early stages to ensure a smoother transition to a new compensation plan...
Valin CEO Joseph Nettemeyer on Valin's fee-based services.
July 10, 2012
Services make up more than a third of Sunnyvale, CA-based industrial distributor Valin’s revenue, up from just 5 percent five years ago. That growth has been no accident. Valin CEO Joseph Nettemeyer spoke with MDM Editor Lindsay Konzak about the distributor’s strategic approach to fee-based services and the culture shift that has gone along with that.
MDM: How are things going for you this year?
Joseph Nettemeyer: We were up 19 percent in the first quarter. I’m trying to get my hands around...
Wurth-North America CEO Robert Stolz discusses how its integration strategy helps it succeed
June 25, 2012
Associate Editor Jenel Stelton-Holtmeier recently spoke with Wurth-North America CEO Robert Stolz about how the industrial distributor, which is part of the Germany-based Wurth Group, is approaching growth in U.S. markets.
MDM: It looks like Wurth-North America had some solid growth in 2011. What are some of the drivers of that growth?
Robert Stolz: We actually had double-digit growth in all four of our divisions: an industrial division; a wood division – which is construction materials; a metal division – which is MRO; and then an automotive division. That’s how we’re structured around the world and in North America.
As for what drove that growth, No. 1, of course, is we’re seeing the overall economy improve. I like to describe it as two steps forward, one step back. It’s very difficult still to plan or to set prognosis because we’ll have a couple of good quarters and then we’ll have a month that’s not as strong. But I think that’s the overall economy.
I also think we’re very focused on market share gain, and we’re pushing very hard in all four segments to pick up market share.
MDM: What’s the outlook for the rest of 2012?
Stolz: It’s interesting. I have moved from cautiously optimistic to optimistic. I think that in an economy like we’re in right now, well-capitalized and well-financed businesses will be very strong.
Of course, one of the things we’ve seen is that as you come out of a recession like this one, it puts a huge strain on working capital. If you think about it, when times are declining...
In November 2011, private equity firm Advent International made a majority investment in Morrison Supply Company, Fort Worth, TX, a distributor of plumbing and HVAC supplies. Chip Hornsby, an Advent operating partner and former CEO of Wolseley, joined Morrison as CEO. Hornsby and Stephen Hoffmeister, a partner with Advent International, recently spoke with Associate Editor Jenel Stelton-Holtmeier about the goals for Morrison, the differences between private equity-backed companies and public companies, and the importance of focusing on people when trying to grow.
MDM: Because different private equity firms have different goals for the companies they invest in, could you tell me a little bit about Advent’s philosophy?
Stephen Hoffmeister: We were founded in the ‘80s as a venture capital firm, and as a legacy of our founding, we are very much a growth-focused investor. Our goal is typically to double or triple the size of the businesses in which we invest. Our philosophy is to support growth in our companies in a way that is reasonable and sustainable and to do it in a way that those achievements are permanent in the long term. When you think about this context and what we can accomplish, it is reasonable to think about substantially growing the size of Morrison Supply over a four- or five-year timeframe.
MDM: What attracted Advent to Morrison?
Hoffmeister: Morrison is the leader in the Southwest plumbing supply market, and we really view that as a terrific position in a relatively more attractive market. The Southwest market, in terms of the macro-market as well as in the general economy, is in a relatively better place than most of the rest of the U.S. Candidly, we’re looking at a lot of opportunities both within the re...
This collection features five of the dozens of interviews MDM editors did in 2011 and 2012 with the leaders of wholesale distribution companies. In this report, you'll find insights from top distribution companies on market conditions, product strategies, acquisition approaches and human resource challenges.
The interviews featured in this collection were published originally in MDM Premium and include:
Rexel Holdings USA CEO Chris Hartmann Recent controversy surrounding the funding of solar energy companies, led by the bankruptcy filing of Fremont, CA-based Solyndra, hasn't swayed Rexel Holdings USA, the U.S. subsidiary of Paris, France-based Rexel Group and No. 3 on MDM's top electrical distributors list, away from the alternative energy market. Chris Hartmann, executive vice president and CEO of Rexel Holdings USA, spoke with Associate Editor Jenel Stelton-Holtmeier about how the company has shifted to meet changing market needs, the future of alternative energy and the challenges Rexel and the electrical distribution industry will face going forward.
Former Grainger U.S. President Mike Pulick (currently Grainger International president) In part one of this interview, Pulick talks about how Grainger views current market conditions, where it sees strength, product line and sales force expansion and the impact of the recession of the role of the distributor. In part two, he addresses Grainger's growth drivers and why it's important to do business on the customer's terms.
Airgas CEO Peter McCausland Radnor, PA-based Airgas, No. 4 on MDM's Top 40 industrial distributors list, spent most of 2010 fending off a hostile takeover bid from manufacturer Air Products. CEO Peter McCausland spoke with Associate Editor Jenel Stelton-Holtmeier about the key drivers of growth for Airgas, goals for the company now that Air Products has withdrawn its bid, and the growing role of technology in sales.
MSC Industrial Supply CEO David Sandler & COO Erik Gershwind In this two-part interview, MSC's leaders talk about the distributor's long-term growth plans, including product expansion, private label, web strategy and acquisitions.
Lewis-Goetz & Co. CEO Jeffrey Crane Lewis-Goetz plans to remain active on the acquisition front. In part one of this interview CEO Jeffrey Crane talks about the distributor's focus in M&A on its core product area and why it's important the distributor remain in that niche as it expands. In part two, Crane discusses the link between technology and value.
MDM recently spoke with Tony Pericle, author of Transforming Data into Action: Using Analytics for Better Distributor Sales Decisions, published by the National Association of Wholesaler-Distributors. Pericle has worked in the distribution industry since the early 1990s.
In Part 1 of this interview, Pericle talks about why distributors are interested in doing more with analytics and how tapping someone to oversee the effort can pay big dividends. He also provides his perspective on the role the IT department should play in enabling the better use of data.
MDM: Distributors are increasingly interested in using the data they have in their systems better. What do you think is driving the growing demand for business analytics?
Tony Pericle: Today’s $2,000 desktop is 200 times more powerful than the $20 million mainframe of 20 years ago. That’s significant because what can be done with one person in three minutes...
Recent controversy surrounding the funding of solar energy companies, led by the bankruptcy filing of Fremont, CA-based Solyndra, hasn’t swayed Rexel Holdings USA, the U.S. subsidiary of Paris, France-based Rexel Group and No. 3 on MDM’s top 25 electrical distributors list, away from the alternative energy market. Chris Hartmann, executive vice president and CEO of Rexel Holdings USA, recently spoke with Associate Editor Jenel Stelton-Holtmeier about how the company has shifted to meet changing market needs, the future of alternative energy and the challenges Rexel and the electrical distribution industry will face going forward.
MDM: How has business been for Rexel?
Chris Hartmann: Right now, things are going fairly well. Similar to all businesses in our industry we certainly faced some tough challenges over the past few years. But year-to-date in 2011 same store sales are up over 10 percent, which we’re very pleased with because a little bit more than ...