Even I learned a few things hanging around with techies at Mincron’s user conference.

IT staffers might as well be Martians for all they have in common with a wordsmith like me. On the other hand, Martian companionship can be enlightening to an Earthling who keeps eyes, ears and mind open to such a cosmopolitan experience. So it was that even I managed to learn a few things at the annual users conference of distribution software vendor Mincron, held in Nashville in early March. For instance:

Nothing against you merchandising stalwarts, but in general the people who manage the electronic nuts & bolts of the distribution business give off more positive vibes. That’s because IT duties and problems do not have much to do with the direction of arrows on a sales chart, and thus our conversations were not so riddled with anxiety as in talking business with wholesaler executives and sales personnel. This was a decidedly upbeat meeting.

Attendance at “INsight 09,” as Mincron called it, was down about a third from the previous year owing to travel budget cutbacks. Of the user companies represented, 80% were a part of the PHCP spectrum. This reinforces what I’ve seen at previous conferences of Mincron and its business rivals - our industry is a focal point for distribution software. Distributors in attendance represented over $15 billion in hard goods.

Only about 30% of distributors utilize warehouse management systems, and the bottom lines of the rest suffer as a result. This was the gist of an interesting session on WMS conducted by Rene Jones of Total Logistics Solutions. He claimed that WMS can achieve 10-25% in overall operating expense, and space savings ranging from 5-20%.

Also coming out of that session - $100 worth of lost inventory requires $2,500 in new sales to make up at 4% net profit. How many of you are making 4% these days? More than likely it costs you $5,000 or more to make up for that $100 item your computer tells you still dwells in your warehouse somewhere but for which proof is lacking.

Words of wisdom from Jones - “You must implement ideas learned in conferences like this within 48 hours of returning, or it won’t happen.” He also cut loose with the best line I heard at the conference, “Customers deal with some distributors because they’re the best of the worst!”

WMS or not, any warehouse can benefit from order and cleanliness. This accords with the “broken windows” theory of crime prevention that is credited with sharply reducing crime rates in New York City and various other places. Disorder encourages greater disorder, so fixing broken windows, picking up litter and cleaning up graffiti discourages criminals. Jones coined the term “dirty shelves theory” as an analogy for the distribution field. A warehouse filled with dirt and debris will inspire carelessness, while one with clean floors and every product in its place will tend to stay that way.

The keynote speaker was renowned distribution consultant Adam Fein, who said of the infrastructure-related components of the American Recovery and Reinvestment Act: “The stimulus bill is going to have an effect, it’s a mathematical certainty. It’s time to beat the streets calling on engineers and friends in municipalities.”

Fein said the housing market will be slow to recover, but when it does, “The rebound will be strong, given that home building is not keeping up with (long-term) demand given our population.” He also warned to “look for a lot of inflation in a couple of years.”

Mincron CEO Paul Lightfoot told me that he expects the distributor acquisition market to heat up a bit again in 2009 after several years of low activity. It’s not that distributors have a great deal of money to spend after these lean years, but there are struggling competitors available at a cheap price. “Many distributors are privately owned, have cash flow and have been through these cycles before. They are not afraid to buy assets when the price is right,” he said.

Lightfoot, whose Briarcliff Solutions Group purchased the company in December 2007, emphasized that “we are an owner-operated business, which I think works to the benefit of the market. We are not a private equity company with an exit strategy. We intend to own and run this business and focus on the long term in tough times like this, not just on results for the next quarter.”