DIVERSE MIX Distributors Focus On Inventory Management
Those distributors who sell a wider product mix generally are a bit more guarded in their forecasts. A contributing factor is they have been able to stabilize depressed sales in one product line with productivity in another. Distributors of a diverse product mix forecast an average increase of 9.7%, with the majority staying at or below that figure.
“You can’t be a specialist anymore,” says Larry Zoeller, president of Material Handling Supply (Chesapeake, VA). “You need to be involved in all phases of material handling, including forklifts, pallet rack, warehouse design, parts, services, everything.” To that end, Zoeller has changed vendors to maximize the value from every product and has modified his sales philosophy a bit. “We now do jobs that three or four years ago we wouldn’t have even looked at because of their size. Now we look at anything that’s profitable, and don’t worry about the dollar value. Profit is profit.” Zoeller anticipates 3-5% sales growth and will add one or two employees in service to handle the load.
A similar expectation comes from Carl Swanson, president of Equipco Division Phillips Corporation (Bridgeville, PA), who will add three or four technicians and one to two salespeople to handle a sales increase of 5%. Swanson has seen success from involvement in a group called Pittsburgh First, a coalition that helps drive business from customers interested in doing business locally. Swanson says the company’s rental utilization has climbed from a low of 50% in 2009 up to 70% now, an indicator that end-users have money to spend. However, he believes they will remain cautious. “Customers have become more aware of the total cost, so they look more closely at fleet management and full maintenance contracts,” Swanson explains. “They like having the security that comes with a guaranteed monthly payment that they can prepare for.”
Fleet management is also a key driver of growth for James Wilcox, president, Raymond Handling Solutions (Santa Fe Springs, CA), the result of what he calls the “consultative approach” that customers are clamoring for. “We want to know as much as possible about their business to help them run their business better,” he says. In an effort to retain salespeople, Wilcox instituted a new, broader compensation structure. “We’re paying them from all facets of the business, including rentals and maintenance contracts, instead of only new equipment sales,” he says. The company is moving its facility in San Diego and he plans to add three to four salespeople and five to ten technicians across all locations. It all adds up to a sales boost of 7%.
At Jefferds Corporation (St. Albans, WV), President/CEO Richard Sinclair will add six or seven technicians to help manage 10% growth in business. The company will go live with a new computer platform in the 2nd Quarter that will enable Jefferds personnel to provide more information and data service to customers. “We’ve really tried to enhance our sales presentations to convince the customer our product would improve their performance,” Sinclair says. The company is beginning to experiment with social media marketing platforms and selling used equipment through its website.
A 10% increase is also the expectation for Papé Material Handling (Eugene, OR), according to Chris Wetle, president. Wetle says the company entered the battery distribution business and expanded its rack and shelving business in 2010, moves that will continue to pay dividends in 2011. He wants to pay closer attention to inventory levels, especially in the rental fleet. “We built a pretty significant rental fleet pre-downturn, and we’ll probably not get back to those levels for a while. We won’t be doing as much leasing, either,” he says. There will be a focus on telemetrics—remote data measurement and transmission—to provide more efficiency in servicing accounts.
Hy-Tek Material Handling (Columbus, OH) signed a dealer agreement for a line of automated guided vehicles that will be a boon for business, according to General Manager Jason Milligan. “We worked with this vendor in the past for direct sales opportunities, but having a formal relationship has already led to several dozen proposals in the works. We’ll see quite an impact from that.” Overall, he predicts sales will be up by 12-25% in allied equipment sales. Some of that growth will come from the company’s e-commerce platform, which surpassed $250,000 in 2010. “Our salespeople are really just learning to use the tools,” Milligan says. “We aim to double our online revenue this year.”
Technology is also a driver at Abel Womack (Lawrence, MA), where a two-year-old enterprise resource planning system is helping the company centralize functions and streamline operations. All of the company’s 90 service technicians are using computers to produce wireless work orders, and a company intranet is being developed to communicate revenue goals. President John Croce spent much of 2010 performing strategic planning for the company to capitalize on the rebound. “We went through a complete analysis of the business, added revenue-producing personnel and product lines to help us achieve growth.” Croce predicts a 12% sales improvement for 2011.
Big plans are also in the works for Mike Burskey, president of Shelving + Rack Systems (Walled Lake, MI). The company changed its name in 2010 from Shelving & Rack Supply to better reflect its expertise in complete systems. The company also will expand its business in rack safety inspections. “It’s more than just a walk-through. We go into a customer site and inspect their rack or systems for possible safety issues and OSHA violations and provide a written report,” he explains. Burskey has his team expanding beyond its traditional region of Southeast Michigan to find new out-of-state business. A new website, complete with an e-commerce platform, will launch in the first quarter. It all adds up to 20% growth.
|Top 11 Challenges for 20111. Increased regulations and taxes
2. The economy
3. Managing growth
4. Meeting customer needs with fewer people
5. Convincing customers to spend
6. Finding and retaining qualified personnel
7. Rising costs of doing business (including health care)
8. Increased level of competition
9. Maintaining cash flow
10. Obtaining enough inventory
11. Proving value to the end-user
Beginning two years ago, WW Cannon (Dallas, TX) President Greg Brown has made investments in the company to prepare for the economic rebound. Those investments include a new CRM system, Internet advertising and Web optimization. Taking it all together, Brown hopes for sales growth of 10%. Customers continue to ask for more and more services, and Brown will make sure the company has the expertise to meet those needs. “We’re doing a lot more general contracting for customers. We pour concrete and do electric work, and that will continue to grow,” Brown says. He will hire an administrative employee to handle order entry.
John Garavelli, chief financial officer at Knoxville, Tennessee-based Allied ToyotaLift, envisions level sales. He plans to add two customer service representatives that will help drive aftermarket sales. The reps will follow salespeople and answer questions and try to sell product add-ons. The company will also be diligent about surveying customers after a delivery to ensure they are satisfied. After adding global positioning systems in 2010, Garavelli is evaluating a new operating system for selection by the end of this year. “The platform we operate on needs to be more integrated with the men on the road, so they can update their laptops with work orders, time sheets and accurate parts counts,” he says.
2011 Industry Forecast:
- Distributor Forecast Part 1: Industrial Trucks
- Distributor Forecast Part 2: Storage & Handling
- Distributor Forecast Part 3: Diverse Mix
- Distributor Forecast Part 4: Engineered Systems