This is a part of the 2014 Distribution Trends Report. The annual report was researched and written by MDM editors based on interviews with dozens of wholesaler-distributors, as well as industry experts and manufacturers. MDM also conducted a survey of its readers to uncover the trends outlined in this report.

2014 Distribution Trends Report

Training is the name of the game as distributors struggle to find qualified workers. Many companies are competing over a select group of talent. In order to combat this, effective training programs have becoming crucial. "Finding people that know how to do this job and do it well is always a challenge. So you have to create some," says David Parks, executive vice president of Hydradyne LLC, Fort Worth, TX.

In order to get the most out of their training investment, distributors are looking to hire younger workers, then train them to bring them up to speed on the industry. "I think that moving forward, we're really bullish on young people joining our industry, training them from within, putting ourselves in a position that we can train them on our products and services, and ultimately our culture, rather than thinking that we can do that by hiring people from another industry or from a competitor," says Don Fritzinger, president of Singer Equities, Glen Burnie, MD.

Vendor-managed inventory remains in high demand as distributors go lean. As distributors look to tighten their inventories, vendor managed inventory services are growing in demand. "We have a pretty strong initiative to offer vendor managed inventory, particularly in the hose and connector side of our business," Parks says. "The interesting thing about that is there was a little bit of a destocking feature going on last year, and I think that’s pretty well over with. The inventories I see in the industry as a whole are pretty lean right now."

It's not just distributors who are looking to better manage their inventory, according to Fritzinger. "If there's a trend that's developed out there, it's the fact that manufacturers aren't stocking more; if anything, they're stocking a little less," he says.

Distributors are expanding into adjacent markets. To try and get the most out of existing customers, distributors are looking to expand into complementary product lines. "We are working to expand into electro," Parks says. "Hydradyne has historically been a hydraulically-focused company, and so some of the areas that we’re working pretty aggressively to grow our market presence would be into the other technologies that touch that – being hose, pneumatics and electromechanical applications for motion control."

One of the most effective ways to grow your business is to sell more products to your existing customer base, Parks says.

Customers are looking for additional services from their distributor. Along with vendor-managed inventory, customers are looking to their distributors to provide additional services beyond product transactions. "I think the key element that we’re looking at, and I think is going to continue to be a way to grow revenue, is to continue to add value to the products that we distribute," Parks says.

For instance, customers are looking for services such as field service and repair at their facility, he says.

Oil and gas end-markets remain strong. Distributors continue to benefit from shale oil and gas exploration. These end-markets will continue to be strong in the next year, Fritzinger says.