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NetPlus Alliance and Texas A&M Conduct Big Research on Small Distributors

NetPlus Alliance and Texas A&M Conduct Big Research on Small Distributors

December 17, 2018

Christian Coniglio, like a lot of owners of small distribution companies, also acts as purchaser, salesperson, customer service rep and just about anything else the customer needs him to. The second-generation owner of C&C Supply, an industrial distributor in Woodbury, NJ, knows what it means to feel stretched, to not have enough time to work on his business, instead of in it.

“Taking a step back and trying to re-prioritize our direction sometimes gets waylaid by just doing business,” he says. “I want to take our business from what I see as an industrial hardware store to something more contemporary and competitive with the level of business where we need to compete. I’m always looking for what other companies are doing, and how we can improve.”

Coniglio’s business, which is a member of the NetPlus Alliance buying group, was a perfect fit for the just-completed first round of the Small Distributor Consortium, launched in 2018 by NetPlus Alliance and Texas A&M University’s industrial distribution program, led by Dr. Barry Lawrence. Another round opens to distributors in 2019.

Texas A&M has been researching best practices in the distribution industry for more than two decades. However, it has never before focused that research on smaller distributors that typically have far fewer resources and whose employees play multiple roles within the organization. Now, with industry change accelerating and potentially affecting smaller independent distributors more than larger players, Lawrence believes that best practices that have traditionally been viewed through the lens of large distributors can be executed by small distributors in a way that can provide a competitive advantage. His team hopes the Small Distributor Consortium will start to build a body of knowledge that can help distributors do that despite the current industry disruption.

“As the smoke clears, your highly innovative niche players, which is what small distributors are, will be adapting their businesses through that process,” he says. “They might look like an entirely different type of company. Or they may look very much the same. Or they may have a few more bells and whistles on them. The important point is that if I’m going to get through the fog, then I’ve got to run my company efficiently. That’s where [the consortium] becomes important, to understand what it means to efficiently run and invest in a small distributor.”

For the consortium, researchers visited each NetPlus distributor member’s location to collect data and then recommend changes. The goal was to identify and understand best practices, quantify their value and prioritize the initiatives that would have the greatest impact for each company. The Texas A&M team is also doing an ongoing survey of both distributors and suppliers, building tools for business assessment to help small distributors identify areas where they can improve.

The findings and recommendations for distributors centered on five Ss: 

  • Sales
  • Stocking (inventory management)
  • Sourcing (supplier management)
  • Storing and shipping
  • Support services (HR, IT, finance)

What resonated most for Coniglio, he says, was a call to action to examine the profitability not only of the distributor’s customers, but also its suppliers. “How can we quantify our suppliers with some sort of value that tells us these are the vendors that we are most profitable with, that we have the best relationship with?” he says.

Coniglio will also be diving into data to look more closely at how well they manage inventory. “That’s something that we talk about but didn’t really have the tools to be able to quantify,” he says. “[The researchers] gave us these benchmarks we should be looking at to really steer what we should be doing, whether it be different customers to target or products to highlight.”

For Lawrence, it’s important to keep in mind what makes a small distributor tick as they move forward with a second round of the consortium, open to small distributors within and outside of NetPlus in 2019. “That specialized touch is what gave the distributor their existence, and what sustains it,” he says. “Anything that you can then take into a more systemized approach to make it more efficient, that will only make them stronger.”

For more information on joining or for the results of the Small Distributor Consortium, contact Dr. Matt Keblis at Texas A&M at keblis@tamu.edu. NetPlus members can contact Kerry Atlas at kerry.atlas@netplusalliance.com.

 

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