Though many distributors are feeling the effects of fierce economic headwinds, investing in the business now is critical for success when the climate improves later this year, Grainger CEO Jim Ryan told MDM in ‘Invest or Die’.
Like other distributors, Chicago, IL-based Grainger is cutting costs in some areas so it can build the company’s infrastructure, e-commerce, supply chain and IT systems. It hopes to have those capabilities strengthened when the economy and the industry rebound later this year.
“Those capital investments are really tough to make when you’re looking for ways to get costs back out of your business when revenue is down,” Ryan says. “Many companies, we found, will take a timeout on those more capital-intensive investments in down economies. But this is not only an opportunity to be different; it’s an opportunity to move forward faster.”
‘Invest or Die’, part of MDM's 2016 Distribution Remodel series, looks at how investment in talent, technology or other areas can give distributors a competitive advantage – and market share – when economic conditions improve.
Investing in a distribution business, especially during a soft economy, can help a company differentiate it from enterprises focused on short-term results, according to Victor Jury Jr., CEO of Summit Electric Supply, Albuquerque, NM.
“We try to practice an investment mindset instead of what I think a lot of larger, publicly held companies, in particular, tend to do,” Jury says. “They view things like payroll or technology from a financial perspective, seeing them as expenses rather than investments. Any business is only as good as the people that it employs and the technology it uses to serve its customers.”
Read more about why distributors should make wise business investments and best practices for implementing them in ‘Invest or Die’.