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Commentary: Profit Dynamics in a Shifting Business Cycle…With a Twist

Industrial Supply Association Relaunches with Channel 2.0 Convention

Industrial Supply Association Relaunches with Channel 2.0 Convention

April 11, 2019

It’s not how you want to sell; it’s how end user customers want to buy. This is the core concept that Ed Gerber, president & CEO of the Industrial Supply Association (ISA), rebuilt not just this year’s annual conference around, but the entire value proposition for members of the oldest distribution association (1902) in the U.S. ISA is the premier trade association for the maintenance, repair, operations and production (MROP) supply channel. I wrote in January of Gerber’s mission; it’s a story leaders of any association can learn from and has both challenged and energized ISA’s membership. 

In this week’s opening session, Gerber mapped out the transition taking place, in part driven by what’s termed Industry 4.0, where customers are optimizing their manufacturing processes with the powerful tools of technology, analytics and digital platforms. That includes how manufacturing customers source their products, services and optimize their supply chains. 

The conference wasn’t a total break from the past. There was a keynoter, the former head of innovation and creativity for Disney, who appropriately challenged members to think expansively. But the core educational programming was focused on what Channel 2.0 looks like, and where it’s going. The core theme of Channel 2.0 is that traditional supply channels and supporting sales models are no longer keeping up with end-user needs, and the rise of Industry 4.0 mandates new capabilities and standards to compete. Channel 2.0 sets a standard of expectations, helping all stakeholders – distributors, manufacturers and independent manufacturers representatives (IMRs) – create better value for each other within the channel, while attaining the goal of satisfying the end-user customer.

Each of the three member segments broke into panel sessions, where committee members who have been working for a year outlined how ISA members can reinvent their respective value propositions based on the new market realities. Each committee output a “compass” that outlines the key value drivers today, and the capabilities needed to meet the requirements of Industry 4.0 customers. Key shifts impacting traditional channel relationships were outlined on each compass for distributors, manufacturers and IMRs.

ISA Compass

The panel sessions also included some difficult conversations around how value creation is changing across the channel, ways that manufacturers and distributors are using marketplace platforms, and even how traditional roles and commission structures for IMRs have to be addressed. These were not your typical talking-heads PowerPoint sessions. It was more of a conversation and sharing of perspectives about the future, and the changes needed to stay relevant. And it was a very different approach to the way associations have traditionally structured conference educational programming sessions; these were more in line with strategic planning sessions, or at least the user guide to the way members can innovate their traditional business models.

To support its Channel 2.0 initiative, ISA is also targeting standards-based lean initiatives to help members eliminate waste for all channel members. A group of experts from member companies is creating an ISA standard for point-of-sale (POS) and standard pricing formats. It’s launched a set of analytic tools specific for ISA members for operational metrics, channel and sales force performance. ISA is also working to transform IMR agencies into stronger professional sales organizations with the industry’s first-ever sales process standard that includes metrics for sales stages, probability, pipeline and opportunity management.

Traditional business and association models are being challenged by the rise of digital, and new marketplace and community platforms. In the case of associations, traditional member-service models are being challenged by marketing groups, technology and other service providers. It’s not unique to distribution. ISA, with the leadership of someone with a successful career in the industry, is disrupting itself to create a new value proposition. 

© 2019 Gale Media, Inc.

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