ASA-Supply House Times 10th annual distributor roundtable: Part 2
Part 2 of the exclusive 10th annual ASA-Supply House Times roundtable interview includes talk of supply chain concerns and the importance of being an ASA member.
Last time, a panel of blue-chip American Supply Association distribution executives gave its thoughts on a variety of topics, including the current business climate, technology game-changers, the current industry labor shortage and the combating of online retailers.
That chat, part of an hour-long gathering, was part of the 10th annual American Supply Association-Supply House Times roundtable interview that occurred during NETWORK2019 in Washington, D.C., as part of ASA’s 50th anniversary celebration.
The 10th annual distributor roundtable features:
- Jeff Camuso, President, Charles D. Sheehy, Avon, Massachusetts;
- Paul Kennedy, CEO, Dakota Supply Group, Plymouth, Minnesota;
- John McKenzie, President, Winsupply Support Services Group, Dayton, Ohio;
- Dan New, Vice President of Administration, Mid-City Supply, Elkhart, Indiana; and
- Sheri Newman, Vice President, Lion Plumbing Supply, Miami, Florida.
Part 1 of the interview can be found at SupplyHT.com.
In Part 2 contained here, roundtable participants continue the conversation, this time tackling topics such as supply chain concerns, the relevance of buying groups, plus the continued importance of being an ASA member.
The conversation about online threats continued with the focus shifting to how to prevent customer atrophy via this medium. Mid-City’s New spoke about the Indiana distributor’s use of social media in connecting with its customers.
“We use Facebook primarily for customer engagement and brand awareness,” he said. “Our biggest success has been utilizing Facebook groups to share pictures and information about our customer incentive trips. We are constantly evaluating other (social media) sites for any opportunity to help serve our customers.”
DSG’s Kennedy brought up the topic of direct-to-consumer during the tail end of this topic discussion. “Some manufacturers are trying to decide where e-commerce or direct-to-consumer fits within their distribution,” he said. “We see some manufacturers starting to go down that path. I think it will continue and will be a natural evolution. We saw it with big-box 25 years ago, and I think them selling online direct is the next step. Where do we fit and where do we continue to add value? There is a certain amount of business that will go direct.”
Camuso added: “The clothing industry resisted, but now you can go right online to Nike and buy sneakers and clothing, so it’s coming, especially for plumbing manufacturers that have such huge product lines and trims. You can’t stock it all.”
But Kennedy stresses things are far from all doom and gloom for progressive distributors.
“Get your hooks in deep with your customers and build barriers for them to go somewhere else,” he stressed. “Maybe it’s something such as integrated accounting where they become dependent and become a true partner as opposed to the transactional piece we have talked about. Service is the other piece here. What value-added services can we provide that are not easily emulated online, whether that’s design, partial manufacturing, assembly fabrication or whatever the case may be.”
What is your biggest concern right now in the supply chain?
Winsupply’s McKenzie was candid in his thoughts as it relates to possible future changes in business conditions. “We concur on the labor topic being concern,” he said. “And we have a particular worry about an economic downturn and the fact we have a significant amount of local company presidents who have not experienced a recession. If there is any period of declining sales and margins on profits, how will they behave? There is some uncertainty about are the necessary skills fully entrenched in their business DNA to fully work through those potential slow times. Are we properly equipped with the current generation managing today that has not previously experienced a downturn?”
Sheehy’s Camuso noted his concern centers on industrial manufacturers. “Our biggest concern is manufacturers of industrial products moving all of their manufacturing offshore,” he said. “If you take a manufacturer of valves and close down their plant and contract with a manufacturer in China, your R&D department is not innovating and you are not manufacturing. You really lose the company’s identity and what sets you apart. I struggle with, ‘Why am I investing in you as a manufacturer when you are not investing in yourself? You want me to hang your banner and inventory your products, but you are not providing me with any of the traditional resources of a manufacturer and vendor.’”
This topic again circled back to how distributors can continue to better interact with their customers. “We all have to accept that every SKU we have will be a commodity at some point, like milk, bread and eggs,” McKenzie said. “At some point, the value to hold the customer tight likely is going to require some investments we have not yet considered, and maybe it will hurt in the short-term, but it turns into payback in the long-term. Everything will have multi-channel distribution, and that may or may not have favoritism to the wholesaler. We have to think about how we can permanently get closer to the customer.”
New added: “The value to the customer we provide is going to change. The value we provided over the last 50 years is going to be the minimum to be in the market. It’s going to be what is expected. How are we going to go above and beyond, and how do we become closer to the manufacturer? Why would a manufacturer choose to go through distribution? How do we provide that value as well?”
How would you characterize the importance of buying groups?
Talk started out here about the recent buying group consolidation leaving three main players in AD, IMARK and The Commonwealth Group (the recent WIT-Embassy merger).
“Consolidation in buying groups has been good,” Kennedy said. “It cleans things up and makes us all stronger. We are an AD member and our digital footprint could not have been done without AD’s investment and forethought. Buying groups will continue to add value beyond rebates.”
Newman said membership in a buying group for Lion Plumbing Supply, a member of IMARK and its Luxury Products Group vertical, is critical. “Being a small wholesaler, it offers us resources and business solutions we would not have access to or be able to afford,” she said. “It’s huge for the little guys. It’s also important that we protect our small, independent wholesalers.”
McKenzie pointed out that even for a national distributor such as Winsupply, membership in a buying group has significant meaning. Select Winsupply showroom locations recently became members of LPG.
“IMARK gives us the opportunity to partner with vendors we otherwise would not be able to knock on the front door,” he said. “Buying groups afford the wholesaler the opportunity to collectively hone their voice about what is most important. When you go to a manufacturer and the group says this is important to us vs. maybe 14 different things, there is that strong value there that helps a manufacturer understand where they should go with things such as product development, marketing and distribution. I also echo the fact buying groups protect the interest of the independent wholesaler. I look at buying groups and wholesalers like Ace Hardware, they provide tremendous value for small businesses to survive.”
Why is being an American Supply Association member so important?
The group’s response to this question drives home the point about ASA’s critical work in the PHCP supply chain.
“We think ASA has a tremendous impact on our people from a training and education perspective,” McKenzie said. “The amount of education and training content ASA offers to wholesalers is remarkable. The value for the price that is paid is beyond reproach. It’s a remarkable partnership.”
New added: “We all belong to a lot of organizations, but there are very few that can help every level of our organization. ASA helps those of us who come to these meetings, and with the education piece, it can help everybody from our warehouse associates and truck drivers to our managers. ASA can help everybody in the organization.”
And this from Kennedy to wrap things up: “I like that ASA is challenging where the industry is today and gives us more to think about and what we need to do as an organization and industry to attack the future.”