Supporting the Industry Can Be Rewarding Distributors are coming to NetworkASA 2013 to take advantage of networking and educational opportunities, to hear from top thought leaders, support the industry and plan their future. Distributors are coming out in full force this fall for NetworkASA 2013: One Industry, One Voice, One Future, to be held Oct. 2-4 at the Renaissance Washington, DC Downtown Hotel. Over the last several years, the annual event has developed into a first-class industry gathering that incorporates a hard-hitting and concise agenda, and at the same time minimizes attendees’ valuable time away from their businesses. Simply put, NetworkASA 2013 is a “big picture” industry event that offers big rewards for attendance. “The Northeastern Supply team will be well represented at NetworkASA this year in Washington. ASA is clearly the dominant association in our industry and deserves our support. Plus, there is a lot going on in that city that warrants our focus and attention,” said Steve Cook, president and CEO of Golden Ring, Md.-based Northeastern Supply.“NetworkASA is the place where we fi nd perspectives and viewpoints that are of tremendous value in operating an industry distributorship in today’s marketplace,” added Joe Poehling, president and CEO of La Crosse, Wis.- based First Supply. “Industry leaders from across the country come together to share thoughts and ideas that help them run a more intelligent and strategic operation.” If networking and meeting with key manufacturers is your primary objective, NetworkASA 2013 is THE place. For several years, the wholesaler and vendor conference appointments have been one of the most popular NetworkASA 2013 events.Formalized one-on-one appointments are set prior to the event and are structured so that everyone has the opportunity for uninterrupted meeting time with their channel partners. Also very popular are the Plumbing Division and IPD open-house receptions, which this year will both kick off and conclude Thursday evening’s activities. How do you feel about LIFO, the lead issue and what they mean for the PHCP/PVF industry? How about the many new taxes, laws and federal regulations Congress is pushing at a rapid pace? ASA has set aside time for prescheduled appointments at NetworkASA 2013 this year for members to visit with their senators and congressional representatives to talk about these and other issues that are impacting their businesses. There is simply no better firsthand opportunity to have our industry voice heard. Three dynamic educational sessions will be presented: • Hire the Best – & Avoid the Rest™ – Dr. Michael Mercer • Strategic Planning for Distributors: Execution Isn’t Everything – It’s the Only Thing! – Tom O’Connor • Sales and Marketing Optimization: Developing Competitive Value Propositions in Distribution – Dr. Barry Lawrence You will find no other event anywhere that brings together top thought leaders such as James Carville & Mary Matalin, Bob Woodward and Bill O’Reilly in one place at one time. In addition, back by popular demand is industry economist Alan Beaulieu, who will provide the 2014 industry forecast.If you have seen Alan’s previous presentations, you know they are worth the cost of attendance by themselves. If you haven’t, this is a perfect opportunity for you to hear for yourself how Alan has helped thousands of business owners capitalize on his 96% forecasting accuracy rate. If you have not done so already, make plans now to attend NetworkASA 2013 in Washington,D. C. Further details, including online registration and a link to hotel reservations, are available at www.asa.net by clicking on the Annual Convention button on the right-hand side of the homepage. You may also contact ASA staff at 630/467-0000 with questions. See you in Washington this fall! ASA Industrial Piping Division to Honor Patrick M. Adams with IPD Award of Excellence The Executive Council of the American Supply Association’s Industrial Piping Division is pleased to announce Mr. Patrick M. Adams, president and chief executive officer of MKS Pipe & Valve Co., has been selected to receive the 2013 IPD Award of Excellence.The award will be presented to Adams during the Weldbend IPD Breakfast on Thursday morning, Oct. 3 at NetworkASA 2013 in Washington. Mr. Adams is well-known and respected by his colleagues and vendors as an honorable and dedicated professional who never stops giving to the industrial PVF industry. Having fulfilled numerous roles with different industry organizations, he is consistently among the first to volunteer his time and energy. Most recently as IPD chairman and a member of ASA’s Board of Directors for multiple terms, Adams exemplified leadership qualities that profoundly influenced decisions and actions that have propelled a tremendous resurgence of relevance that ASA and IPD enjoy today. He is a champion for our industry’s proud legacy, and at a time when it is rapidly aging, Adams works just as hard to cultivate rock-solid, young talent that will lead his company and other independent distributors toward a prosperous future. Jay Bazemore, chairman of the Industrial Piping Division and vice president of JABO Supply Corp., stated: “Pat Adams continues to demonstrate the ultimate in leadership and dedication to the industry that is required of a recipient of the IPD Award of Excellence. His willingness to share so much of his knowledge and expertise coupled with his influence within our industry has helped ASA’s Industrial Piping Division continue to grow and flourish as it does today.” Sales, Marketing and Growing Your Market Share Dr. Barry Lawrence will present Sales and Marketing Optimization: Developing Competitive Value Propositions in Distribution on Oct. 2 at NetworkASA 2013 in Washington D.C. Distributors are essentially sales and marketing organizations.Suppliers rely on distributors to provide market access and create demand (volume). Distributors operate off narrower margins and therefore cannot capture as much value from continuously growing volume.This leads to a natural conflict. Suppliers want distributors to push more and more product into the market, while distributors have to be more selective. The sales force is often motivated to follow the supplier’s model since most compensation methods are volume-based (gross margin or sales). Growth is imperative. Distributors must grow to keep suppliers and investors happy. The investor, however, is interested in growth that provides a solid return on investment. The typical distributor has more potential investments than funds to invest, hence the need to be selective. The question is how to align the sales force, investors and suppliers. Funds to grow come from working capital, earnings and investor confi dence. Working capital includes inventory and accounts receivable minus accounts payable. Investor confidence determines what percentage of earnings will be left in the business for growth. Proper working capital control frees up money for investment and wins investor confidence to reinvest as well. A major manufacturer was disappointed because their distributors showed little interest in growing. An examination of their distributors’ financials revealed some unexpected problems.The distributors were averaging between 3% and 4% earnings (the numerator in the ROI equation). Inventory was turning about 4 times per year and receivables were turning a little more than 6 times. When other assets were added in, the distributors were getting about an 8% return on their investment. Stock market index funds were outperforming these independent firms at much lower risk. The supplier was continually pushing the distributor to sell more, carry more inventory (to avoid potential lost sales) and offer more of the supplier’s line card. The supplier set annual requirements on how much the distributor had to buy to get rebates. The rebates soon became a requirement to meet price competition. Lower prices meant narrower margins (a 20% markup on $80 is less than 20% on $100). The net result was a distributor network with declining margins and so clogged with assets that ROI plummeted. Meeting these confl icting needs (supplier and investor) takes us back to sales and marketing efforts. The sales force has to be armed with the right value proposition (marketing) on the right products with the right customers. The distributor and supplier must start with growth initiatives that provide a solid return on investment. Finally, the distributor must aggressively work through their sales force to sustain the growth initiative. Suppliers who play games to force more volume through their distributors may end up driving out investment. Both sides need to understand what makes each other successful and work on strategies for mutual success. Dr. Barry Lawrence holds the Leonard and Valerie Bruce Endowed Chair and is the director of the Industrial Distribution Program, director of the Thomas and Joan Read Center and director of the Global Supply Chain Laboratory at Texas A&M University. Visit http://id.tamu.edu for more information.
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