The 2020 Mid-Year Economic Update_long

Remembering David Weisberg, Industry Catalyst

Weisberg helped change distributor-manufacturer relationships from adversarial to partnerships.
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In 1981, at the age of 55 – when many people think about winding down their careers – David Weisberg left his job as president of lighting manufacturer Progress Lighting to form Affiliated Distributors, where he served as chairman and CEO until retiring in 1991. Weisberg died at age 89 in late November.

Weisberg was an industry innovator who challenged the prevailing model of distribution buying groups with a vision for a different value proposition: change the traditional adversarial relationship between manufacturer and distributor into a productive partnership.

Buying groups in industrial distribution date to the 1960s. By the 1970s, there were several regional groups active in the electrical products channel. Weisberg shifted the model by creating a privately owned group versus the traditional co-op structure that still prevails across many sectors. The real innovation was to extend the networking capacity of such a group to create win-win partnerships through marketing and planning programs. The concept brought process improvement to traditionally adversarial win-lose negotiations.

Just as important to AD’s success was Weisberg’s ability to galvanize an initial group of quality electrical distributors to form AD – and consequently a core of common suppliers. The structure of the entity gave it sharper teeth to set performance standards that differentiated it from competitors. Rigid rules and negotiating power also rankled some competitors, members and suppliers, but few argue with its success in elevating the business practices of members.

While AD was created to serve the electrical distribution industry, Weisberg tweaked an industry model that ultimately shifted the economics and value chain for many other industrial distribution sectors as AD absorbed other groups and expanded. In its first year, AD’s electrical distributor members had a combined $50 million in revenue; today, AD’s 570 members have an aggregated $31 billion in annual revenue across seven core product sectors.

With a core function of negotiating rebates for its members, AD has had a significant impact on profit and power transfer in the product channels its members participate in, measured in billions of dollars. While its programs have evolved, its core vision has not.

Arguably, AD has been a major factor stemming the tide of consolidation in its role of strengthening the value proposition and competitiveness of its members. In the 25 years since the group's formation, wholesale distribution has seen significant consolidation across every sector, with the growth of broadline national chains as well as specialty distributors into adjacent markets. And yet, members of AD continue to grow and thrive as independents.

Traditionally, distributors have been sales-driven organizations. Marketing and market planning have not been core competencies of smaller, independent companies. AD has given many distributors the structure, process and network of best practices to elevate their marketing and to provide professional development of management in other ways, as well. Like other co-ops and networks, it has helped members leverage economies of scale and volume to adapt more effectively to changing industry conditions.

While David’s son Bill, who took the organization's reins in 1991, has driven the consolidation of buying/marketing groups across six other industrial and construction product sectors and greatly expanded AD’s growth, the fundamental vision of value that David had in 1981 is the same. He experienced a dysfunctional market dynamic in his career when it came to manufacturer-distributor relationships and, through his ability to forge productive relationships, created an entity much larger than he said he ever imagined. But its success was no surprise to him.

My story of the first time I met David Weisberg in the early 1990s is very much the same as hundreds, perhaps thousands of others. He was cordial, welcoming and patient in helping a distribution newbie get a better understanding of industry dynamics, sharing his passion for the value of AD.

In the words of one 20-year member: “When I met David at my first AD meeting it was like he had known me all my life. He was so very warm and gracious. David never forgot your name. And when you would see him at a meeting, you had better have your AD lapel pin on. If not, he had plenty in his pocket, and you had one on when you left visiting with him.”

That description sums up the characteristics that combined relationship, advocacy and best practices into a vision that changed the fundamental competitive landscape of industrial and construction product channels. That’s quite a legacy for one gentleman.

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