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MDM Interview: Auto Bankruptcies Hit the Channel
After more than 30 years in manufacturing, Douglas K. Woods left his position as president of Parlec Inc., to become president of the Association of Manufacturing Technology. Woods has a long history in the machine tool industry, working at all levels, from small tool and die shops to multibillion-dollar machine tool corporations. Woods recently spoke with MDM Associate Editor Jenel Stelton-Holtmeier about the impact of the auto industry bankruptcies and financial woes in other sectors, the role of AMT in the channel, and trends in manufacturing technology.
 
This is the first of a series of interviews with association presidents about trends in industrial, construction and other distribution markets.
 
MDM: In just the past few months, both ...
Features
MDM Interview: Now Is the Time for Sales Discipline
With sales low across the industry, many companies are fighting just to break-even. However, there may be more opportunities for improving your sales than you expect. Jim Ambrose, president of BranchManagerCEO.com and founder of Jim Ambrose's Workshop, says now is a great time to retrain and reenergize your sales force to find new ways to gain market share. 
 
MDM: Today's economy has created many challenges for businesses. What impact has it had on the sales process?
 
Jim Ambrose: Most, if not all, of my clients tell me that one of their big issues is that their salespeople tend to get comfortable in their account packages. And the problem with getting comfortable today is that your accounts aren't very busy. If the ...
Features
How to Manage Talent for the Upswing
Many distributors and suppliers have had to trim their work force due to a dramatic decline in demand over the past half-year. But when the economy starts to turn around, distributors will face another challenge: building back up. This article features expert opinion on what to keep in mind.
 
One of the biggest mistakes companies make in adjusting their work force during down times is cutting too deeply and not being able to recover when the economy rebounds. They are very much focused on the short-run, says Peter Capelli, director of the Center for Human Resources at The Wharton School of the University of Pennsylvania.
 
This can cost companies in the long-run. In addition to the costs associated with layoffs - severance pay or ...
Features
First Quarter 2009 Public Distributor Report

About this report: This is the MDM Public Distributor Report, provided on a quarterly basis to subscribers of Modern Distribution Management. The report is available online only.


Click here to download this report in pdf.


A common theme in public distributors' earnings conference calls for the second quarter was a lack of visibility into potential conditions for the rest of the year. Overall the sales environment continues to be challenging for our industry," says Michael Grebe, Interline Brands CEO. "Visibility remains extremely low, and like our distribution peers, we are not at a point where we see a meaningful recovery in the very near term."
 
Here is a ...

Features
Protecting Your Knowledge Base
MDM recently spoke with experts on the topic of institutional knowledge retention, and the importance of putting into place a framework for making knowledge transfer part of the company culture. This article looks at the key elements to keep in mind.


Many companies are running leaner these days.

The situation - driven by downsizing and retirements - can trigger a loss of knowledge critical to the business, an issue many managers are facing. That's something that managers everywhere in every industry overlook frequently when adjusting their work force, says David DeLong, author of "Lost Knowledge: Confronting the Threat of an Aging Workforce."

Factor into the equation higher turnover among younger ...
Finance
Behind the Motion Industries-General Tool Deal
Motion Industries has purchased another industrial supplies distributor, once again broadening its reach in the sector. The acquired company's leadership talks in this article about how they came to the decision to sell their business to the fast-growing Genuine Parts Co. subsidiary.
 
Motion Industries continues to grow its industrial supplies business, this time expanding its reach in the West. The $3.5 billion power transmission/bearings distributor, a subsidiary of Genuine Parts Co., announced May 7 it has acquired General Tool & Supply Co., Portland, OR. It is one of many industrial supplies-focused acquisitions the company has made in the past few years.

The acquisition of General Tool & Supply includes its sister company, Tucson, ...
Research & Analytics
The Chrysler Bankruptcy Ripple Effect

Distributors that serve the auto industry and related sectors say that the bankruptcy of the first of the Big Three automakers will have a broad impact; they anticipate some distributors may even fail as a result. This article looks at what some distributors say could occur.

Following the bankruptcy filing by Chrysler LLC and the potential filing by General Motors at the end of May, many distributors are preparing to turn to Washington to make the government aware of the broad impact these actions will have on the hidden industry of wholesale distribution.

"Chrysler's bankruptcy is going to have a much wider effect than people realize," says Drew Tucci, director of marketing and sales at Eastern Bearings Inc., Waltham, MA, and ...

Finance
MDM Interview: Partnering with Private Equity
Anixter International's former president and CEO, Bob Grubbs, is using his 30 years in the distribution business in a new role with Irving Place Capital; the private equity firm is looking to increase its focus on investments in distribution companies.

Grubbs says he was attracted to the firm because it is committed to understanding the industry. "The model made a lot of sense to me," he says.

Among the 50 investments Irving Place Capital has made: Aearo Technologies (sold in 2006 to Permira Advisers, which sold it to 3M in 2007); MultiPackaging Solutions (which recently completed a sixth add-on acquisition); and ReddyIce, a manufacturer and distributor of packaged ice products.

Anixter, where Grubbs has spent his entire career, ...
Features
Keeping Layoffs to a Minimum
Wholesaler-distributors are searching far and wide for ways to cut costs without cutting people. Here is a look at how some distributors have approached the process.
 
When business began to soften in November for W.P. & R.S. Mars Co., Bloomington, MN, the industrial distributor began preparing for a rough 2009. Then sales plummeted in January, and executives in the company knew some serious decisions had to be made.
 
The management team was pulled together to brainstorm ways to reduce expenses that wouldn't involve layoffs. Our employees are so important to us that we wanted to make cuts in every area before we considered reducing our staff, says controller Beth Ahrens.
 
A desire to avoid layoffs is common among ...
Features
Align Selling Resources to the Market
For distributors who have had to implement reductions to their sales force, there is a legitimate concern that as the number of salespeople go down, so will revenues. A three-step process exists to help mitigate these potential effects.
 
One question many distributors are asking is, How can I reduce costs without losing sales?
 
The answer: "Align your selling resources more closely with the market."
 
Achieving this is not simple, but a proven three-step process for doing so does exist. The steps: Segment customers, utilize effective sales management practices, and ensure incentive structures are in alignment. This article will discuss the importance of each step and illustrate how the outcomes from each will enhance ...
Features
The Challenges in Downsizing

Distributors across many sectors face a decision many never faced before: whether to implement layoffs. This article offers insight from two distributors on deciding who, when and how, as well as expert opinion on best practices in this difficult time.

Business is off about 40 percent from a year ago for one industrial distributor in the Midwest. As a result, for the first time in 22 years, the owner has had to lay off roughly a fifth of his small staff. It was one of the worst days of my life, he says.

The fear in employees' eyes as they walked to the conference room the day the layoffs were announced was palpable, he says. The process has taken an emotional toll on him and the remaining workers. For many distributors, a dramatic drop in demand in the ...

Features
Top Concern Among Distributors: Maintaining ‘Survivor’ Morale
The owner of the industrial distribution company says he survived three layoffs at a manufacturing firm in the 1980s. The work didn't disappear, so he worked harder for less money and lived in fear of being in the next group of employees asked to leave. "People need to come to work happy and motivated," he says.
 
How layoffs are handled makes a huge difference in the productivity and morale of remaining staff. These days, layoffs are not unusual, which means that although they might not surprise those who are laid off, the fear of being laid off is always present. In a recent survey, 60 percent of respondents said they were afraid of losing their jobs.
 
Some companies have the attitude that those remaining "ought to be happy to ...
Features
MDM Interview: Helping Employees Find New Work
Skip DeVilling, president of DeVilling & Associates, LLC, a Sarasota, FL-based executive employment search firm, recently spoke with MDM Associate Editor Jenel Stelton-Holtmeier about how companies can help laid-off employees through outplacement programs.
MDM: Many companies are having to turn to layoffs in order to survive the recession. What are the broader impacts of these moves?
 
Skip DeVilling: Labor is the easiest thing to cut. It can be done at any level and the results are immediate. Executives aren't immune, and if you cut one high level executive position, the savings there can be significant. That doesn't mean that they can't be done better. Communication is important. Providing support after the lay off, such as ...
Economic Trends
Opportunities for Distributors in the Stimulus Package
The negative perception some have of the stimulus package may be grounded in part in truth, says Adam Fein of Pembroke Consulting. But there are positives to be found in the American Recovery and Reinvestment Act of 2009 (ARRA). Fein presented his review of the opportunities and impacts of the bill for distributors in a recent MDM Webcast.
While the economic stimulus package may not be perfect, Adam Fein saw a potentially damaging level of pessimism in some of the responses to a survey conducted the week the bill passed. About one-fifth of executives indicated they would decrease their focus on growth initiatives because of the stimulus bill, Fein says.
Fein recommends distributors turn their heads from the bad, and instead consider areas where they can benefit from new ...
Features
MDM Interview: Grainger’s Global View
Grainger continues to strengthen its global operations; recently it tapped Acklands-Grainger President Court Carruthers to a newly created post, president of international businesses. As part of that, Grainger also recently named D.G. Macpherson to oversee Grainger's global supply chain operations.
 
In this interview with MDM, Carruthers talks about Grainger's plans globally, business improvements at Acklands-Grainger, and how the distributor views talent recruitment and retention. Carruthers has been with Grainger in Canada since the summer of 2002. He has been the president of Acklands-Grainger there since the end of 2006.


MDM: Why did Grainger put this position in place? What are your goals in this new role?
 
Court ...
Economic Trends
Global Report: Mexico Hit by Export Slowdown to U.S.
This is part of an MDM series of articles looking at growth opportunities globally.
 
The remaining optimism at the beginning of the global financial and credit crisis very often came from emerging markets. Though those markets' growth slowed, they still saw growth, contrary to the negative trends seen in the U.S. Growth forecasts for Brazil, for example, were revised downward, but remained positive, and India continued to see investment growth.
 
And another emerging market - Mexico - continued to steadily plod along even as its trading partners suffered from a barrage of bad news. The picture has since darkened for many of these countries.


Until a few months ago, it was believed that the emerging markets, and ...
Features
Inventory Reductions On Tap
Effective inventory management practices are gaining importance as distributors reduce inventory levels in response to demand drops and a renewed focus on cash flow. This article examines best practices for approaching the task.
 
In mid-November, sales for many distributors - with few exceptions - plummeted. Distributors were caught with excess inventory in an environment of much lower demand.
 
Many distributors are now working down inventory to maximize cash flow. And they have returned to a focus on the basics: accurate forecasting, reliable safety stock parameters, improving communication with vendors and getting a good handle on the product that is already in their warehouses so they can avoid overstocking.
 
A top concern for ...
Features
MDM Interview, Part 2: Graybar – The People Factor
MDM Editor Lindsay Young sat down with Graybar Senior Vice President and CFO Beatty D'Alessandro at the January meeting of the National Association of Wholesaler-Distributors. The second part of this interview focuses on how Graybar is addressing the recruitment, retention and training of its employees. Part 1, published Feb. 25, 2009, can be found online at www.mdm.com.
 
MDM: What does Graybar do to encourage its employees to continue their education and training?
 
Beatty D'Alessandro: We offer tuition reimbursement plans for employees in undergraduate and select graduate programs. We also provide all employees with extensive training that helps them work more effectively. 
 
Our training programs ...
Economic Trends
Strategies for Surviving the Recession

The economic outlook looks very grim right now. The housing-led slowdown that began in 2007 has now turned into a deep U.S. recession that looks likely to be the longest and deepest downturn since the 1930s.

Unprecedented financial and credit market volatility has reduced prospects for a quick turnaround. Both U.S. Gross Domestic Product (GDP) and the wholesale distribution industry's revenues will decline this year.

As I see it, the companies with the will, the skill, and the till have the best chance of surviving the downturn and coming out with a better position on the other side:

  • The skill to manage their businesses well despite a crisis; ...
Features
Fourth Quarter Public Distributor Report
About this report: This is the MDM Public Distributor Report, provided on a quarterly basis to subscribers of Modern Distribution Management. The report is available online only.


Click here to download this report in pdf.

In distributors' recent earnings calls with analysts, many said they were looking at cost reductions, better training, increasing private label, and considering strategic acquisitions in the next year. The focus will remain on sustaining profitability.

Refocusing on the Workforce
Drug distributor Owens & Minor has seen a work force opportunity arising from the economic turmoil: Build on existing resources. In the last quarter, the drug distributor ...

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