As 2020 came to an end, five American Supply Association distributor members participated in a virtual roundtable interview to cover the latest trends and challenges present in the PHCP-PVF supply chain.
This roundtable usually takes place during ASA’s annual NETWORK conference, but panelists instead joined Chief Editor Natalie Forster on a GoToMeeting video call – an action most have gotten quite used to this year. This year’s participants in the 11th annual ASA-Supply House Times distributor roundtable included:
- AJ Benton, branch manager for Fountain Valley, California-based Smardan Supply;
- Kyle Cline, vice president, operations at Oklahoma City, Oklahoma-based Locke Supply Co.;
- Mike Plasier, CEO of Sioux Center, Iowa-based Plumbing and Heating Wholesale;
- Jack Bell, president and CEO at Louisville, Kentucky-based Masters’ Supply; and
- Josh Aberman, executive vice president at Miami, Florida-based Lehman Pipe and Supply.
Part two, diving into specifics related to lack of labor and the next generation, growing and serving markets, and continued distributor success will appear in the February issue of Supply House Times.
How has the supply chain adjusted to the major shift to virtual communication?
Across the board, distributors say the shift happened relatively quickly, and there are some advantages to this form of communication. Benton believes his team became more well-rounded due to the new way of communicating. “Our team became more open to stepping outside of their comfort zone,” he said. “Our sales team had to be creative and develop a new meaningful approach to communicating with customers.”
Plasier said while it was a shaky start, he’s thankful for the many virtual meeting options available. “I’m really glad the ‘Zoom world’ came about so quickly,” he said. “At the beginning, I was worried about continuing customer relationships, but these video options have truly allowed us to stay connected from afar.”
Along with virtual communication between customers and distributors, the industry has adjusted to virtual conferences and networking. Plasier explained with virtual platforms, more of his team was able to benefit from the conferences. “Since travel wasn’t involved, I could have more of my team attend,” he said. “I still don’t think anything replaces the in-person conferences, but it was a major benefit ‘sending’ more employees.”
Bell agreed, saying overall, the shift to virtual has been a good change. “I think ASA, our buying group and SWA did a great job with their virtual shows,” he said. “I started out not familiar with Zoom at all, but now I’d consider myself somewhat of an expert because we’ve used it so much.”
Aside from the pandemic, what challenges is the PHCP-PVF supply chain facing?
Aside from COVID-19, distributors are working through several other ongoing challenges. The continuing shift to online buying was the first issue mentioned. “The shift towards online retail has been a growing concern over the past few years,” Benton said. “Now more than ever we’re competing with Amazon and other large online retailers as some customers are after as little in-person interaction as possible.”
In response to the challenge of competing with readily available online retail, Plasier said it’s all about adding value. “As distributors,
our greatest challenge is figuring out how to make customers choose us,” he said. “We are constantly working to add value for the customer that they won’t get online or from retail stores.”
Aberman mentioned the uncertainty for distributors following the 2020 election. “With the new administration we are unsure what will happen with the COVID-19 vaccine and if there will be additional shutdowns in 2021.”
Aberman went on to note the instability with commodity pricing is another area of concern. “The changing pricing of copper has been an issue,” he said. “It’s not necessarily because of our market; it’s because of the technology surrounding copper and steel production that’s driving up material pricing.”
Distributors agree that the moving of equipment and material throughout the supply chain is presenting many challenges. “Obviously import products have been unavailable in some cases,” Plasier said. “I’d love to see U.S.-manufactured products step up and be able to compete more.”
Aberman again brought up price instability when talking about lack of supply concerns. “When prices are low, there can be a lot of instant demand, leading to limited supply,” he said. “Then you have cases where manufacturers end up sitting on inventory, which, in turn, drives up prices again.”
Bell said the lack of available inventory is prominent in Kentucky as well. “Our inventory value is not rising because we simply can’t get it in,” he explained.
While the distributors think the pandemic has slowed down the supply chain, they said it’s an issue that was present prior to 2020. “I think the fleet industry is likely seeing a labor shortage and talent issues as well, which is causing these challenges with our supply chain,” Plasier said.
How much of a concern is consolidation within the industry?
Cline kicked the acquisition conversation off, saying that while he anticipates seeing more distributor acquisitions due to lack of succession planning and the pandemic, he is more concerned with manufacturer acquisitions. “Depending on who buys who, there can be product quality concerns or relationship changes that affect us,” he said.
Plasier explained there are both benefits and concerns related to manufacturer consolidation. “In some cases, it allows us to buy more product lines from one source, which is easier,” he said. “At the same time, there becomes a smaller number of vendors we can buy from.”
Benton brought up another angle – consolidation of manufacturers reps. “We saw a lot of consolidation with reps during 2019; it was almost like a race to see who could get bigger,” he said. “During that time, we saw customer service from those reps take a hit, so if that pattern happens again it’ll be a concern for us.”
Bell agreed, “We have seen continued rep consolidation lately, which puts limitations on the brands we can choose from to offer our customers.”
Plasier and Bell mentioned their passion for independent distribution, and how seeing larger companies buy out smaller suppliers is concerning.
“This industry was built on independent distribution,” Bell said. “If we continue to let the national companies buy the independent distributor, it will be a growing concern.”
“I believe the independent distribution network provides a level of service and relationship that some national distributors can’t provide,” Plasier said. “There are plenty of great people that work in those large distributors, but I do see consolidation as a threat, and we are working to find ways to encourage independent distributors to stay independent.”
How has ASA helped your company this year?
When discussing the many initiatives ASA has launched this year, and its resources for distributor members, the panelists mentioned several specific tools. Cline spoke to the economic webinar series with ASA Chief Economist Dr. Chris Kuehl. “With economic uncertainty and concern earlier this year we were looking for any information we could find to help plan for the future,” he said. “The economic webinar series was a great place to get industry-specific insight that helped us make decisions.”
Benton mentioned the importance of ASA’s advocacy efforts, especially in California. “Earlier this year, there was a proposed water bill (California AB 2060) that would have negatively impacted manufacturers and distributors,” he said. “ASA was vital in assisting us get that bill shut down, which was huge and helped avoid another headache this year.”
Bell said the Town Hall interview series with ASA Vice President of Sales and Membership Mike Miazga was particularly helpful in seeing what was going on throughout the industry in different areas.
Bell, Cline and Plasier all mentioned ASA’s training programs and employment initiatives. “We use the customizable employee training program, and the detailed job descriptions; they’ve both been really helpful and much easier than creating our own programs,” Bell said. “The latest program, PROJECT TALENT, is just getting started, and I’m really excited to start using that tool for recruitment.”
Participants also discussed ASA’s networking benefits. “I’d tell any distributor that becoming an ASA member means access to networking and the ability to build relationships within the industry 24/7,” Benton said. “The value of being able to pick up the phone and discuss industry issues with fellow members is unmatched.”
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