22. 5 percent — increased more than two points
from last year’s survey, while 55.5 percent say
support has stayed the same.
84 percent of respondents say their suppliers have increased prices in the past year —
up more than two points from our 2016 survey. That figure has stayed within two percent
of that over the past three years since topping
out at 89 percent in 2014.
When asked what methods suppliers have
offered as a means of reducing costs, 38 per-
cent of respondents picked new product intro-
ductions as their top choice — up nine points
from our 2016 survey. Other top choices in-
cluded reduced shipping fees (29 percent),
co-op marketing ( 27 percent) and technical
assistance ( 26 percent). In the “other/write-
in” — which nearly 20 percent of respondents
chose, two-thirds of respondents said no price
reduction assistance has been offered by their
supplier, with one respondent saying, “They
have offered nothing and no logical reason for
their (price) increases.”
Onsite vending continues to grow as a means
of boosting supplier relations, evidenced by a
six-point jump from last year’s survey to 33
percent of respondents who say they install/
maintain vending machines as customer lo-
cations. That figure has increased nine points
since 2014. Of those who say they don’t offer
vending machines, 17 percent say they plan to
pursue offering them.
We finished up our Best Practices section by
asking respondents about their global business
interests. Forty-nine percent say they currently
do business outside the U.S. — down three
points from last year’s survey. Eight percent
say they will do business internationally within the next three years — up 2. 5 points from
2016 — while 36 percent say they plan to stay
exclusively domestic. Overall, 64 percent say
they either currently do business outside the
U.S., plan to, or have in the past.
Value Of The Distributor
Industrial distributors have collectively been
ramping up their value-added services over the
past decade as price becomes less of a factor
in customers’ buying decisions, more manufacturers sell direct and competition amongst
distributors edges ever higher.
Our survey shows how this trend is impact-
ing sales. Forty-one percent of respondents
say services comprise at least 11 percent of
their total revenue — up eight points from last
year’s survey. Beyond that, nearly 21 percent
say services comprise at least 21 percent of
sales — a figure that has climbed steadily from
14 percent in 2014.
We always ask our respondents what they
feel are the primary reasons customers do
business with them. Relationships (83 percent), product availability (73 percent) and
delivery time (61 percent) remained the top
three as expected with little or no difference
from last year, but what reasons changed the
most? Technical support was picked by 64
percent — down five points from last year’s
survey, while 34 percent 24/7 support — up
five points. Though 48 percent of respondents
chose price as a primary reason, that’s down
three points from a year ago, suggesting distributors feel that price is becoming less of a
priority for customers.
As for which services respondents are charging a fee
for, the amount who say they
charge for consigned inventory
dropped almost seven points
from last year’s survey to nine
percent. Inventory management fell six points to 14 percent, while tool crib management gained five points to 14 percent. Other
notable changes were a two-point gain in set-up/installation to 26 percent, while employee
training declined 3. 5 points to 13 percent.
Other top revenue services such as shipping
(70 percent), fabricating/kitting ( 23 percent)
and design/engineering consulting ( 20 percent) had little or no change.
Other notable statistics from this section:
•Forty-eight percent of respondents say
they are involved in vendor-managed inventory (VMI) programs — down more
than three points from last year’s survey.
VMI involvement was above 51 percent in
each of the three previous years.
• Thirty-six percent of respondents say
their business is a member of a buying
group, co-op, or both — identical to our
2016 survey. That breaks down to seventeen percent who are in a buying group
— down seven points; those in a co-op
increased nearly five points to 8. 5 percent
and those that are members of both increased two points to 10 percent.
Go to any industrial supply trade show and
you’ll almost certainly hear a message about
the great need for talent recruitment and
succession planning in distribution/manufac-turing. Even with the great strides made in
the industrial economy over the past six-plus
months, these are areas that continue to present a major challenge to distributors. How do
you make working in a warehouse, or selling
industrial products attractive to new talent?
How do make industrial distribution attractive
to a millennial workforce? Our readership faces
these questions increasingly every day.
Sixty percent of our survey respondents say
yes — identical to last year and shows there’s
a large chunk that are struggling to recruit. We
asked our respondents to rank their business
on its ability to recruit on a range of poor, fair,
good, very good and excellent. More than 38
percent say they are fair or poor, while only
24 percent rate themselves as very good or
excellent. The largest chunk of respondents
— 38 percent — rate themselves in the
middle as good. But our results show that more
customers choose you