Lindsay Young, Author at Modern Distribution Management - Page 4 of 11

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Posts By Lindsay Young
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Breaking Through Complacency
According to Harvard Professor John Kotter, a sense of urgency is a desire to act on critical issues now - making real progress every day on issues that are central to an organization's success. And when an economic crisis hits (or any crisis for that matter), a sense of urgency in a business becomes all that more important if you want to come out of that crisis ahead of where you started.
 
Unfortunately, Kotter says the recession has created very little true urgency. Why?
 
He said: "People don't understand what true urgency is. The economic situation is creating a lot of false urgency, which is this anxiety-driven, anger-driven frenzy of activity where we all run in circles figuring out what to do. It is activity-focused not ...
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MSC Industrial Aims to Grow Market Share Despite Conditions
MSC Industrial Direct Co. Inc., distributor of metalworking and MRO supplies to industrial customers, reported sales for its fiscal 2009 first quarter were $433 million, down 1 percent from $437.6 million in the prior-year quarter.

Profit for the quarter was $45.1 million, down from $46.9 million. The distributor could not provide much guidance for future quarters, however. Our forecasting is about as cloudy as it's ever been, David Sandler, president and CEO, told analysts in MSC's quarterly earnings call.

Sandler said that customers reported conditions worsened substantially in the first quarter; very few customers are growing. He said that orders and revenues are down, and customers are reducing inventories. Shutdowns over the holiday were ...
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Refocusing Your Business for New Economic Realities

One commentator on the Harvard Biz Twitter feed recently wrote: Downturns are as much about psychology as about GNP, about withering confidence as about shrinking employment. (See the feed here.) It may be hard to grasp the idea that some of what is happening may be controllable in the current market - especially with today's unemployment jumping to 7.2%. But there is certainly no shortage of advice on managing through a downturn out there - and every author says there are ways to seize on opportunities despite the tough times.
 
Another article on the topic popped up this week in BusinessWeek, titled

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New Report Analyzes Past Year’s Recessionary Performance
We've heard before that the recession started earlier than anybody had thought. Manufacturers Alliance/MAPI released the following today:
 
A Manufacturers Alliance/MAPI report argues that the current U.S. economic recession began as early as January 2008 rather than in the widely presumed latter stages of 2008.
 
In The 2008-2009 Recession Began One Year Ago,Chief Economist Daniel J. Meckstroth provided four data points to support MAPI's contention that the recession started in January 2008 and that abrupt deterioration from the credit crunch in September 2008 merely dealt a final body blow" to economic ...
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Mid-America Business Conditions Index at a Record Low
Creighton University's Mid-America Business Conditions Index was at a record low of 33.0 for December. The report, found here, is based on a survey of supply managers in the region. An index of 50 is considered growth-neutral."

The survey showed job losses for the eleventh time in the past 12 months. Inflation has turned to deflation, and export orders have plunged. North Dakota and Oklahoma are the only states in the region where leading economic indicators are above "growth-neutral."
 
A Creighton economics professor and the head of the university's Economic Forecasting Group says that ...
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The Year in Distribution: 2008
The economy has officially shifted into lower gear after a turbulent ride in the second half of 2008. This article is an overview of trends and events in the past year in the wholesale distribution sector.
At the end of 2007, MDM published an article titled, Preparing for Uncertainty in 2008."At the time, the economy was starting to show signs of weakening. Certain sectors -automotive and housing — had already taken a dive. And deal-making had started to ease.
But we could not have guessed the enormity of change that would take place this year -particularly in the second half. Financial markets collapsed and previously stalwart institutions went under.
 
Residential construction plummeted further. In November, unemployment rose to 6.7%; half a million jobs ...
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What Readers Want to See in MDM’s Pages in 2009
We asked in the MDM Reader Survey recently what special topics you wanted to see covered by MDM in the next year. Here are some of those answers, with in some cases, links to recent premium content articles on the topic: 
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How Executives Can Show Employees: We’re All in This Together
BNET (www.bnet.com) says one way that companies can boost employee morale in a time of budget cuts and layoff fears, is to sacrifice executive pay to send a message down the ladder that "we're all in it together."
 
The article cites $37.5B foodservice distributor Sysco Corp.'s experience. Apparently the distributor's top 15 executives announced last summer they would voluntarily take a 5% pay cut. The rest of the executives got a pay freeze for the next year. Everyone else got a 3% pay increase -that is 50,000 employees.
 
A Sysco spokesman is quoted in the article as saying:
 
"We wanted to show our people that it was a tough economic time, but that the corporate office was going to take the first hit."
 
And ...
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Survey: Most Companies Not Taking Drastic Measures Despite Economy
Mercer Consulting reported results of its recent Snapshot Survey, where more than 1,000 organizations in the first two weeks of November told about the challenges they face as a result of the current economic turmoil.
 
Despite all the bad news, according to Mercer, most appear to be "refraining from taking drastic actions."Here are a few benchmarks: 


  • Nearly three-quarters of respondents say they are somewhat or very likely to reduce their 2009 pay increase budgets, but far fewer are somewhat or very likely to freeze salaries across the organization. Nearly two-thirds are not planning to reduce work forces by "significant levels." 

    • ...
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Canadian Economy Poised to Follow U.S. Into Recession
Canada may follow the U.S. into a recession, according to an economist interviewed for a recent article in MDM, Forecast: Canada Faces a Rough First Half."Demand for Canada's products in the U.S. continues to fall despite a weakening of the Canadian dollar. About a third of Canada's GDP is based on exports to the U.S.
 
What's more, commodity prices and demand for raw materials have softened, putting a damper on the historically strong resources sector. And though Canada's banking system has not seen the same turmoil as in the U.S., more businesses are reporting tighter credit conditions in the final quarter of the year.
 
Read the full story on Canada's economy.

Motion Industries ...
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Global Manufacturers Announce Layoffs
A number of manufacturers have announced layoffs in the past couple of weeks, citing weakness in the global automotive, industrial and construction markets.
 
The Stanley Works announced that it would be cutting 2,000 positions, or 10% of the current employee base. It will also be closing three manufacturing facilities and eliminating certain layers of management."
 
In a news release, the company explained:
 
"During previous recessions dating back to the early 1970s, at times when the company had much higher percentage exposure to CDIY markets and customers than today, the company's physical unit volume shipments have never declined by 7% or greater for two consecutive quarters. As previously reported, the company's third quarter 2008 unit volume ...
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MDM Reader Survey: How Global Trends Are Affecting Distributors
In MDM's recent Reader Survey, we asked respondents to tell us about the trends they are seeing in markets here and abroad. As one respondent said: The world is one large business market, and you have to watch the entire global regularly -and not just the home market."

In response to the survey question on how global issues are affecting their companies, some respondents said they weren't seeing any impact. Other respondents said:
 
·         Security, compliance and new freight charges are making domestic products more affordable to produce and purchase.
·         Stronger dollar is improving the cost position on ...
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Forecast: Canada Faces a ‘Rough First Half’
Canadian economists are saying the country will follow the U.S. into a recession. The severity of that recession -which is currently expected to be short -is dependent on how far the U.S. falls. Here's an overview of the current situation.
While conditions in Canada no more than a few months ago pointed to a downturn, a recession was not necessarily yet in the cards thanks to strong domestic demand and high commodity prices.
But with the U.S. economy officially in a recession, Canada is facing the same prospect. Demand for its products in the U.S. continues to fall despite a weakening of the Canadian dollar -which in any other year might make Canadian products more attractive to U.S. companies.
 
What's more, commodity prices and demand for raw materials have ...
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MDM Reader Survey: Distributors Shifting Strategy for an Uncertain 2009
From time to time before the end of 2008, we will be posting results and ideas from the recent MDM Reader Survey. Here's a look at respondents' strategic focus going into the new year.
 
In response to the MDM Reader Survey question, How have you changed your strategy for 2009 based on current economic trends?", many readers -but not all -said they were making a change. Many said they were going back to basics. Improving customer service and pricing were both mentioned. Others are leaning operations to ensure efficiency and cut unnecessary costs.
 
Many respondents mentioned either layoffs or a hiring freeze, in addition to delaying major capital expenses. One respondent plans to improve maintenance on existing equipment to make it last longer. Others said they ...
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Distributor Touts VMI, Green Practices
Rick Peterson, president of All-West Fasteners, Seattle, WA, a regional industrial fastener and electronic hardware and components distributor, recently spoke at the Specialty Tools and Fasteners Distributors Association convention and trade show in Denver, CO. He is the group's outgoing president. The event drew nearly 4,500, down from the past two years but not far off 2005 attendance.
 
In his speech to the attendees, outgoing STAFDA President Rick Peterson touched on business practices his company has benefited from. One of those: Vendor Managed Inventory (VMI). The goal of VMI, he says, is to make sure the customer's production line or job never shuts down due to a product shortage, and to minimize the total cost of supply.
 
Our VMI program has played a ...
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Manufactured Home Market May Be the First to Recover
Manufactured housing, at least according to one Forbes article, is likely to be a stronger market than homes by the national builders when everything starts to rebound. Why? Because there will be more incentive to buy them. Apparently, the U.S. government will be including them under its favored lending programs and the Federal Housing Administration is increasing loan limits for people buying manufactured homes but not the land underneath.
 
FHA loans, according to Forbes, have grown popular lately because the loans allow for a low down payment. The agency has gone from backing 2% of U.S. mortgage debt in 2006 to a third of all home loans in 2008, Forbes says.
 
Read the full article at forbes.com <a ...
Technology
Study: Supply Chain Technology Market to Grow 7% Annually in Next 5 Years
AMR Research has released a study that estimates the supply chain management technology market will grow 7% annually for the next five years, despite current economic conditions. The market is currently at $6.5 billion. AMR Research says: The supply chain, and the technologies that support it, will play an important role in helping companies deal and thrive in an economy that is going to be quite unlike anything we've seen in the post-war era."
 
The five major forces at work, and how technology will help, according to AMR: 


  • High inflation - Inflation will force supply chain managers to play an important role in protecting product and company margins through cost control and increased efficiencies in their operations.


  • ...
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Value-Added Selling: Why Aren’t Customers Responding?
Value-added selling has certainly been a buzz word, and very few would argue that doing value-added selling well can be a challenge, especially if a competitor is selling essentially the same product.
 
A recent blog on Inc.com addresses this challenge:
 
"Despite the overuse and misunderstanding of the 'V' word in recent years, selling organizations have received the message: The one and only thing customers really want to know is, 'What is the value to me if I buy from you?' If everyone got the message and the value strategy is in play, why aren't customers responding? At the same time, why are sales cycle times lengthening, the number of 'no decisions' increasing, ...
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Suppliers to Detroit’s Big Three Are Nervous
The Windsor Star recently published a report on how tool makers and mouldmakers in Ontario have grown nervous about taking on new work and being paid by Detroit's Big Three auto makers. According to the article, parts makers were told last week that new contracts will no longer be insured by Export Development Canada if they supply Chrysler. And Ford and GM are also being watched by the Canadian agency. The agency insures $33 million worth of contracts with Chrysler and $230 with GM and Ford.
 
Some manufacturers are worried that if they don't get their contract insured, they will be "wiped out" if one of the automakers goes bankrupt. Not surprisingly, ...
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A History of Recessions
For most of us, a recession would not be a new experience," says Rick Peterson, outgoing president of the Specialty Tool and Fasteners Distributor Association (STAFDA). Peterson was speaking at the STAFDA's annual trade show and conference November in Denver, CO.
 
He cited historical statistics in his speech: 10 recessions since World War II, on average lasting 10 months each, a peak unemployment rate of 7.6% and a decline of gross domestic product (GDP) of 1.8%. The two worst modern recessions, he says, were those of 1973-1975 and 1981-1982. In those, unemployment reached 9% and 10%. "History tells us recessions are frequent and short-lived before the business cycle self-corrects and prosperity returns," Peterson says.
 
The chief economist for the Manufacturers ...

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