Driving Cost Efficiency

..."be quick but never in a hurry" - John Wooden, UCLA Basketball coach

Without losing their focus on heightening operating efficiencies, preserving cash flow, and continuing to do more with less, companies must also turn their attention to a possible recovery.  This means building organizations and process capable of quickly scaling up and down, and investing in management systems that can sense and respond quickly to changes in customer demand.

Going forward, wholesaler-distributors must not only simplify operations to better manage complexity, they must embrace iterative strategies, make quick rather than thorough decisions, and execute with speed.  Specifically distributors should:

• Accelerate internal and external collaboration initiatives to create differentiation.
• Apply more predictive analytics in key decision areas.
• Build a management system and culture that supports rapid decision making and execution.
• Optimize operations and processes for efficiency.

ACTION POINT: Simplify your organization and execute decisively.

Getting ahead of Scarcity

This situation will change

The economic crisis interrupted the trend toward increased scarcity and higher prices--especially for critical supplies, talent, real estate, and other key commodity inputs.  In some cases, prices for resources and assets--including real estate, steel, copper, and labor--dropped sharply, often below fair value.

This situation will change, however. Many commodity prices have already rebounded, and scarcity will return, creating talent shortages.  Wholesaler-distributor's should act now to gain long term advantage.  distributors should:

• Secure access to critical resources and relationships
• Find and keep the best available talent
• Move quickly on mergers, acquisitions, and other opportunities for consolidation
• Embrace green business to grow revenue and reduce resource usage

ACTION POINT: Look for the opportunities to strategically expand your businesses operations, product and service offerings.

Confronting the New Economic Environment

now is the time for leaders in wholesale distribution to make bold moves 

In this environment, it is easy to feel overwhelmed and adopt a cautious approach to strategies and decisions.  This is the wrong strategy; now is the time for leaders in wholesale distribution to make bold moves in three areas that will position them for the future.

• Get ahead of scarcity
• Drive cost efficiency through productivity and agility
• Develop targeted approaches to growth.

ACTION POINT: Be bold in the three areas above to confront the new economic environment.

Confronting the New Economic Environment

Volatility, complexity, and uncertainty are very much top-of-mind for business leaders.

Going forward uncertainty and uneven growth is the new economic reality for business in general.  Debt reduction is now a priority for individuals, businesses, and, we hope,  government.  Volatility, complexity, and uncertainty are very much top-of-mind for business leaders.  Collectively, these factors represent a fundamentally new economic environment that distributors must understand, plan for, and respond to with decisive actions.  Three realities that will continue are:

• Economic shifts will continue.  The overall structure of the U.S. economy continues to undergo deep structural changes.  The shift from "manufacturing led" to "service focused" will continue.
• Competition will intensify.  As a result, it is more important than ever to reinforce existing business relationships and protect revenues with existing customers.  This environment will demand that distributors: sharpen product and service pricing, better understand cost structures and become more efficient.
• Reassess your role in the channel.  Companies should focus on: Collaborating more deeply with customers, assessing their organizations for elements that add value in the channel, and form partnerships with other distributors to leverage individual strengths and effectively deliver differentiating capabilities.

ACTION POINT:  Understand the current realities and plan for and respond to them with decisive actions.

Capitalizing on Key Trends

two trends that appear to have sufficient breadth and depth to maintain their relevance to wholesale distribution

Given the lingering amount of uncertainty, unpredictability, and volatility in the global and domestic economy, making predictions of any sort is likely to be a risky proposition.  However, two trends that appear to have sufficient breadth and depth to maintain their relevance to wholesale distribution are as follows:

• The continued expansion of the broadly defined "green business segment," including renewable energy generation; energy efficiency; carbon and water efficiency; waste reduction; recycling; and in the food sector, organics an sustainability
• An expanded role or government in areas such as environmental, labor, and safety regulations; international and domestic trade; and of course, taxes and tax incentives.

ACTION POINT: These trends are more relevant than ever to wholesale distribution--both in terms of opportunities and challenges--and therefore must capture a share of management's attention and investment going forward.  Capitalizing on these trends now can help distributors gain a substantial competitive advantage down the road.