This is part of the MDM series, The Shifting Competitive Landscape. Here are two more stories of distributors who are collaborating with competitors to bring value to customers or expand their reach. Read the other case studies from the Dec. 10, 2012, issue here.
PM Industrial Supply: Sharing Inventory with Competitors
Collaboration with competition can be a sensitive area, but for some distributors, it can help them serve their customers more effectively and efficiently. PM Industrial Supply Co., Chatsworth, CA, works with two “friendly competitors” in the area to get products they don’t carry, such as certain cutting tools.
“It really helps us compete with larger distributors, because it helps us be more of a one-stop shop for our customers,” says Zack Gerin, IT and marketing manager.
The service is not an advertised benefit to customers, but it allows the distributor to respond quickly when customers call looking for something that’s not normally stocked. The arrangement means that PM Industrial doesn’t have to place special orders with manufacturers for those items and doesn’t have to send that customer to another distributor.
The companies don’t share resources, only product. Gerin says PM Industrial actually places daily orders through the arrangement. The participating companies have a verbal agreement for how much they will pay above cost for the products they order.
It’s a seamless transaction for the customer. Customer information isn’t shared among the cooperating companies, and the customer only receives one invoice.
As with all collaborations, trust is the key to success, Gerin says. “Make sure you work with a company with integrity, and be sure to stick to the terms you originally agreed to,” he says. Even though the prices are based on a verbal agreement, honor that as though it were in writing, he says.
There are no plans to expand this arrangement right now, because the companies have been able to fulfill customer needs. In addition, the three companies have an established relationship that doesn’t exist with other distributors in the area, Gerin says.
EDGE Investment Partners: Expanding Global Reach
Demand has increased for distributors to have global reach. That’s not always possible if a distributor has to do it alone. In June 2012, 11 electrical distributors joined together to form EDGE Investment Partners LLC to meet this demand.
The focus of the group is to “build a network of distribution company partners outside of North America,” according to the press release announcing the group’s formation. The group is based in Milwaukee, WI.
EDGE, an acronym for Electrical Distribution Global Enterprise, completed its first acquisition in July when it took a majority interest in Brazilian distributor Ladder Automação Industrial LTDA. Ladder operates primarily in the Brazilian states of Sao Paulo and Rio de Janeiro.
The acquisition provided EDGE with a foundation for growth in Latin America, an area that has experienced significant growth in recent years.
“We are excited to create this new opportunity for the members while taking advantage of our strengths to work with potential distribution partners and suppliers to advance our industry globally,” said board member John Burke, president, Kirby Risk Corp.
EDGE includes French Gerleman Electric Co.; Gerrie Electric Wholesale International Inc.; Horizon Solutions LLC; Kendall Electric Inc.; Kirby Risk Corp.; McNaughton-McKay Electric Co.; North Coast Electric Co.; Revere Electric Supply Co.; The Reynolds Company; Van Meter Industrial Inc.; and Werner Electric Supply Co.