Executives from key industrial organizations discuss how suppliers of every swath can identify opportunities for new markets and product lines.
Over the last decade the industrial distribution market- place has changed dramatically, surviving in a challenging economic situation and a changing business environment.
Industrial Distribution ’s associate editor, Abbigail Kriebs, got a
chance to speak with three industry executives representing diverse viewpoints to hear how business has changed in the last few
years and what trends they see going forward into the rest of the
year and beyond.
Industrial Distribution: What kinds of changes has your
company seen in the past decades that have affected its
business more than anything else?
Jack Bailey, President and CEO of wholesale cooperative
IDC-USA: Probably the most significant change in the last ten
years has been the advancement of technology. Technology has
taken the art of “just-in-time” to a whole new level. Distribution
companies are now technology companies because distribution is
driven by logistics and logistics is driven by technology.
Roger Woodward, President of master distributor Alliance
Distribution Partners: Although Alliance has only been in business since 2009, the intense marketplace pressure on independent distributors has greatly affected our business strategy. With
national distributors and internet players aggressively moving
down-market, independent distributors face significant competitive threats. Despite these challenges, independents still control
majority market share in industrial supplies. Creating offerings
that protect the health and viability of the independent distributor channel is critical to the success of our business.
Tom Barfell, Director of buying cooperative INCOM Distributor SupplySM: The last decade has brought a number of changes
to our business with industry consolidation, the emergence of
e-Commerce, globalization, and a demand for broader product selection (including private label) from fewer sources. Consolidations
and mergers have impacted our business as the smaller to medium
size distributors — the ones who most benefit from the programs,
tools and specialized services we offer — are being absorbed by
It’s driving an even greater need for highly talented and knowl-
edgeable sales people to combat an increasingly competitive mar-
ket. Today’s distributor sales team needs
to be highly functional online as well as
in social media.
Industrial Distribution: How does the
distribution landscape look different
than it did ten years ago?
Bailey: We are seeing more and more
distribution companies diversifying their
product offering. This is driven by competition as well as the end user’s desire to
implement vendor reduction initiatives.
Woodward: Industry consolidation has dramatically changed the
landscape in our business. Vendor mergers, distributor acquisitions,
and increased private equity investment are creating much larger
entities across our industry. It’s a truth in the distribution business
— the bigger you are, the greater potential you have for creating
competitive advantages in the marketplace. This trend will only accelerate in the years ahead.
President & CEO of
Barfell: Today’s new technologies and the growth of e-Commerce
and mobile/tablet applications have put product information at
everyone’s fingertips. So while many customers are used to looking through catalogs and line cards to make purchase decisions,
today’s distributor is becoming more computer-savvy as end users
find additional efficiencies in leveraging the internet. End users
are also relying more on their supplier to carry the inventory they
need when they need it, which has actually provided a tremendous opportunity for master distributors like INCOM Distributor
Supply. We break case on 90 percent of our products, and having
a superior logistics network of distribution centers allows us to
provide same day shipping direct to the end user. We carry the
inventory so our distributors don’t have to.
Industrial Distribution: How has your company had to
adapt to stay relevant to the industry?
Bailey: We are now required to provide our distributors with
more options so they have a larger arsenal to fulfill the customers’
needs. We have needed to increase our inventories dramatically,
not just in quantities, but in the number of product lines and verti-