The use of the now-obsolete SIC code system and the information that it historically provided to the business community was something no one really thought twice about. But did you know that the SIC code system was replaced by the North American Industry Classification System (NAICS) in 1997? The new NAICS system is in use today, and is helping today's decision makers take action on the basis of somewhat skewed statistics.
In developing NAICS, its authors used criteria that re-classified some 68,000 wholesale distribution branch locations (in a variety of industries) as retail establishments. This was in large measure due to the criterion that stated that businesses with "walk-in" trade would automatically be included into the retail pool. So, plumbing counters were viewed as "walk-in" businesses, hence the "loss" of 5,732 plumbing and heating wholesale locations.
These branch locations then "reappeared" under the retail listing of "Other Building Materials Dealers," resulting in the shift of $16.8 billion from the plumbing & heating wholesale sector over to the retail side - a significant number in light of its potential to alter market decision-making.
However, this article is about good news: It's precisely the plight of industries like ours, as well as the electrical distribution industry that "lost" $23 billion through the NAICS implementation, that spurred the Bureau of the Census into action. In fact, it has invited our involvement in the process of changing their criteria so that the next NAICS publication presents a more accurate picture.
Adam Fein, Ph.D., of Pembroke Consulting, who has distinguished himself as an expert in the wholesale distribution field, has been leading the way on behalf of wholesalers throughout the country. He and his colleagues have made excellent inroads with the Bureau executives, and will participate in the group that will be revisiting the classification criteria this year. Early feedback has been very positive.
The bottom line? Manufacturers and others who have used SIC codes (and who are now using NAICS information) to base market decisions are encouraged to bear this in mind. The plumbing & heating wholesale market has not shrunk by $16.8 billion! In fact, when the new NAICS is published, it's entirely possible that we may find even more than the 5,732 locations that we thought we'd lost.
Last month we provided a few examples of the costs of not training. We pointed out that it takes as much as 30-40 times the cost of an error in new sales to make up for the error.
Some may respond that the cost of training also requires 30-40 times the cost of training in new sales to pay for it. The fallacy in that argument is that training provides measurable benefits that directly enhance profitability through reduced errors, reduced turnover, lower risk, higher sales per employee and several other benefits, while errors are simply throwing money down a rat hole.
That said, it's important to spend training funds intelligently by ensuring that training is targeted at training problems, that the impact of training is leveraged with other human performance components such as compensation and performance reviews, and that the tools and systems are in place to maximize performance. Training must also focus on job requirements, critical profitability measures and company issues that increase risk and liability like safety, security and sexual harassment.
Calling All ManagersOn March 24-27, the Education Foundation will host the Institute for Distribution Management 2002 in Indianapolis. Over the two-day period the Institute will offer 12 workshops/seminars that align well with job requirements, skills needed for operations excellence and knowledge that builds the individual's communication skills and distribution business literacy.
In order for a company to get the most profit-building results from its investment in training, the company needs to leverage the excellence the training offers with the greatest potential impact on company profitability.
Here are a few suggestions to help you get the most benefit from sending your employees to IDM 2002.
n "Cover" the Institute: Most companies send more than one person to the Institute. Since it offers 3 concurrent workshops per day, you can maximize the value to the company by making sure all workshops are covered. In general, the workshops fall into the areas of branch and operations management; sales and sales management; and personal and management skills.
n Share the IDM resources: All workshops provide extensive handouts with lecture summaries, checklists and other resources. Use these to compile a comprehensive management reference that can be made available to everyone in the branch.
n Target the attendees against the most appropriate workshops: Take a few minutes with your management team to identify your desired business results for the coming year. Examine existing job descriptions and recent performance reviews. Identify the thorny issues your company faces. Compare these to the program descriptions and make strategic selections of the workshops.
n Give your attendees an assignment: You will be making an important investment in the employees you have selected to attend. Require your attendees to develop five operations improvement suggestions for every workshop they attend. The ideas should then be presented and discussed at one of your management meetings. Reward and celebrate those who come back with the most beneficial ideas.
You can download a faxable registration form for IDM 2002 from the ASA Web site. Just go to http://www.asa.net/asef/asef.asp and click on Institute for Distribution management 2002.
If you would like help in making your selections, call Paul Martin at 312-464-0090. If you would like your questions answered by e-mail or can't download the registration form, please send an e-mail to firstname.lastname@example.org.
MORE REGIONAL EVENTSIn last month's issue, we told you about some great regional events coming up. Here's one more to add to your calendar:
The CWA Convention is still the shortest of ASA's regional conventions, priding itself on being able to provide a great program in just 24 hours! It begins on Monday afternoon with a legislative update by Pat O'Connor, one of ASA's key advocates in Washington, D.C. A reception and dinner follows, and networking after dinner will be encouraged by the CWA leadership.
Tuesday kicks off with Scott Benfield, who'll conduct a seminar called "Sales Force in Transition - Changing Roles of the Distribution Seller." Later that morning, distributors and manufacturers will visit together over a table-top session, capped off by a buffet lunch.
Contact Dan Schlosser at CWA at 419-845-2023 or email email@example.com for more information.
For a complete calendar of regional conventions and other industry events, visit the ASA Web site at www.asa.net.
WHO'S WHO AT ASAThis is the first in a regular series of "snippets" about volunteers who give their time to ASA. It's designed to help you learn a little about the kind of people involved in the association's Board of Directors and working committees.
This month's subject is Frank Naughton, President, Naughton Plumbing Sales Co. Inc., Tucson, Ariz. He's the newest member of ASA's Executive Committee (one of three Vice Presidents) and Chairman of the Young Executives Council. Frank also serves as a Trustee of the ASA Education Foundation.
Naughton Plumbing Sales Co. was founded 51 years ago, and Frank has been involved in the business for the past 28 years.
The company operates four locations serving the Tucson, southern Arizona and Mexico market areas. It has about a 60/40 split of sales between HVAC and plumbing products, specializing in the sales of evaporative cooling and air-conditioning products.
Frank says, "I grew up in the business as a little kid sweeping the floors and cleaning the bathrooms. As I went through high school and college, I worked part-time during the year and full-time during summers - working all areas of the company from warehouse to sales and then accounting.
"After graduating from the University of Arizona in 1988, I started in outside sales, working with contractors and institutional customers. From that point, I became General Manager in 1995, and when my father and uncle retired, I became the third president of the company on January 1, 2000.
"I give my time to ASA because I truly enjoy working and associating with such a great group of people who are committed to the betterment of the industry. My experiences with the ASA staff and the general membership have enabled me to develop a peer network of industry professionals who face the same challenges as I do on a day-to-day basis."
Frank and his wife Beth have a two-year-old daughter, Megan, who frequently accompanies them when they travel to ASA meetings and other events.
HELP IS HERE FOR GETTING UPC NUMBERSASA's distributors have urged all of their vendors to obtain UPC numbers for the products they carry, and the Center for Advancing Technology is now offering a turn-key kit that will help get this done.
Along with ASA's ongoing efforts to establish a standard database for our industry, there is a continual drive to get more manufacturers to obtain UPC (Universal Product Code) numbers for their products. The UPC numbers are an integral part of any standardized database, and will make development of this resource that much easier.
The "UPC Starter Kit" has been assembled to help companies understand how to get started and complete this process. It includes not only reference material (printed and CD format), but also free consultation and ongoing support from experts in the field.
"There is a misconception among some manufacturers that obtaining a UPC number is an arduous or expensive undertaking," says Inge Calderon of ASA. "In reality, it's neither, and with this new program that CAT is offering in conjunction with IBCA, we can now virtually walk them through the process." The Starter Kit is available at an introductory price of $375.
For information, contact Kevin Price at 1-800-608-7308 or call IBCA directly at 215-489-1722. Or, go online for more details and an order form: http://www.ibcaweb.org/asa_kit.htm.