look at cost from an entirely different angle. Price is not everything. Getting down to the “cost per hole drilled” is a more strategic means of calculating cost savings. That is what IBC members do
all day long and they are able to do so because they have polished
their craft over several generations. An independent distributor
acts as a trusted advisor, one who will go to the ends of the earth
to solve a customer’s problem.
Independents are the unsung heroes in our industry. Many companies take independents for granted — specifically those end-us-ers that focused solely on price. Most independent distributors are
committed to end users, not Wall Street: who would you rather
invite into your shop?
ID: How does IBC serve independent distributors specifically?
RN: It is IBC’s job to harness the power of our independents and
create a national offering to end users. We have the best, technically driven distributors — problem solvers that love to roll their
sleeves up to help a customers. IBC has built a buying group to
assist our distributors from a purchasing perspective. We have also
developed a National Account Platform that allows our distributors to compete for any piece of business that is going national.
For example, if a distributor’s largest customer decides to take
their MROP spend national and the distributor is not part of
IBC, there is a good chance they would be out of the running.
Through our National Accounts Program, IBC is not only able to
save business for that distributor — but also plug in other IBC
distributors to meet the needs of the national contract.
In fact, 93% of all IBC contract business is new business for our
independents. IBC is also a minority owned business. The value
we provide to our distributors, through our contract business and
buying group, allows IBC to offer valuable minority credits to our
ID: What are some of the biggest issues facing independent distributors today? How has consolidation specifically affected this
group of businesses?
RN: Big boxes keep getting bigger, as they are entering other areas of the marketplace. Driven by Wall Street, the big boxes have
to get creative with delivering numbers. Acquisitions and expanding reach produces headaches for the independents, especially
when end users are too focused on price.
Consolidation affects independent distributors unless they have
a home. I can recall trying to recruit a distributor in the Midwest
and the owner was flat out against joining a group. He ultimately
chose not to.
Two year later, when his biggest customer went national, it
was an IBC independent distributor who was awarded the busi-
ness. In the end, IBC ended up delivering two million dollars in
new business to his regional competitor.
TB: However, consolidation is not always seamless for the custom-
ers that are involved. Customers that are accustomed to personal-
ized service will still gravitate to independent distributors for their
product knowledge and technical expertise. When companies get
acquired, it can cause disruptions and delays in the decision making
process. This is an opportunity for independents to show how their
technical expertise and nimble customer service can benefit the
customer — providing value that is outside the box.
While it may be something of an uphill battle, indepedents would
be wise to consider how strong organizations like IBC (as well as
Affiliated Distributors, IDC USA, or NetPlus Alliance, for example)
can leverage economies of scale to help improve the competitive
advantage of the independent distributor. There’s no doubt it’s
tough out there, but industry experts like Keough think there is a
future for these businesses in industrial distribution — though a
challenging one: “I’m still not predicting the demise of the independent distributor. Distributors have overcome all sorts of difficulties over the years, but this may be the most challenging time in
recent memory for those who continue to remain independent.”
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