So far 2013 has been somewhat turbulent. M&A activity has continued (MSC’s planned acquisition of Barnes, for example), as does overall economic/market uncertainty. It provides distribution executives with some choices to make about priorities and where to invest in initiatives that will produce the best return in 2013.
That’s the fancy way of posing the question: “How do we protect the revenue we have, and where are we going to find growth this year?”
Based on the top 12 distribution trends identified by MDM for 2013, there’s no single right answer. It’s indicative of the current state of distribution markets that there are so many cross-currents and competitive drivers. There aren’t just one or two big things shaping the competitive environment.
The two core areas where strategic investments are being made are improving internal accountability and creating better ways to stay connected with customers. That’s nothing new.
What is new is where and how companies are placing their bets across what I like to think of as the three pivot points that form competitive differentiation for wholesale distribution companies – talent, technology and analytics. Many companies tend to do well in one or two of these areas; it is the rare company that continues to innovate across all three.
Many distributors are investing in sales resources. That’s supported by an MDM survey last week that shows 70 percent intend to hire new employees in 2013, and most are focused on filling outside and inside sales positions.
Based on more than 170 responses with 70 percent from distributors, we feel that is a significant indicator that the industry is getting past the drag of economic uncertainty that politics played a large role in creating the last half of 2012.
But there’s a critical competitive gap emerging. Some companies will invest in sales resources the same way they have for years – people with traditional outside sales skills. Others will look hard at the skill sets they need to better engage with customers with very different needs than even a few years ago in terms of information, sales process and methods of support. Investments in creative people, backed by solid analytics and technology, will be where companies will gain real competitive advantage this year.
MDM’s top trends indicate how markets are getting more complex. This environment will test the abilities of distribution management to help their teams be selective, adaptive and proactive in pursuing the best opportunities for improvement.