Newton, Mass.—A new research study, Facing the Forces of Change: Future Scenarios for Wholesale Distribution , is printing and will be released October 1^st, 2001, through its sponsor, the National Assn. of Wholesaler-Distributors. The study will be published by the Distribution Research and Education Foundation of NAW.

Researched and written by Pembroke Consulting, Inc.'s president Dr. Adam Fein, the study offers insight into the future of the industry to 2006. Using a method called "scenario planning," Fein draws four distinct scenarios for the future of distribution.

"Scenario planning assumes that the future cannot be predicted," Fein said. "Instead of picking the single 'most likely' forecast, you can compare and contrast alternative opinions on how the industrial distribution industry will evolve. Together, [the forecasts] help wholesaler-distributors anticipate coming trends, discover strategic options and spot early-warning signals of change," he said.

The study is the sixth in the series Facing the Forces of Change®, a forward-looking set of studies that began in 1982, according to Ron Schreibman, vice president of strategic direction for NAW.

"We saw a need in the early 80's to look out over the horizon," he said. "By 1992, when the third edition was published, we began to think that trends like consolidation and technology were moving way too fast, and began publishing every three years. We still held to a five-year outlook for the studies, though." The last two studies were published in 1995 and 1998. Some key points presented in the 2001 study are:

• Customers and manufacturers will pressure distributors to replace their traditional sales and marketing forces with the Internet
• Customers will become more powerful in the supply chain and distributors must do more to coordinate their activities with their customers' activities
• Manufacturers will have to tailor the technology they buy to the capabilities and intentions of distributors; distributors will have to do likewise in conforming to customers' needs
• The Internet and other technologies will continue to be tools used to facilitate supply chain transactions. Different business types will use the Internet in very different ways
• New competitors will challenge the role of the distributor in the supply chain.

According to Fein, each scenario offers distributors a chance to see what the future might look like under sets of variable assumptions involving customer behavior, the mix of online and offline activities with customers and manufacturers, and the strategies used in the supply chain. These are the scenarios:

The Bricks and Clicks scenariodescribes the strategies for success if distributors fully integrate technology into their companies and solidify their role as the primary route to market for manufacturers.

The Coordinated Channels scenario analyzes strategies for success when manufacturers and distributors use the Internet to collaborate for product, marketing and inventory management.

The Unbundled Supply Chain scenario analyzes channel strategies when customers and manufacturers pay only for the specific supply chain and marketing channel activities they require.

The Common Platform scenario analyzes marketing and distribution strategy for interacting with online exchanges established by groups of large customers.

"To get the most out of the report, you must analyze your own company's position," Fein said.

The main use of the report is to help wholesalers anticipate, strategize and plan, Fein added, and distributors have three ways in which to apply the scenarios.

"Create a strategy to deal with two or three scenarios that are most likely to occur in your line of trade; test the robustness of your company's existing strategy and plans with a 'road testing' process that usually leads to critical insights; or create a system for monitoring critical market developments and testing your own assumptions," he said.

This edition is the most "user-friendly" to be published yet, Schreibman said, and it is also one of the most flexible reports of the series because distributors can "mix and match" their specific customer or regional attributes in testing the scenarios. Distributors can plug their strategies into the scenarios and see how they work.

"This is the first time we have taken the opportunity to divide the universe of wholesaling into five distinct areas according to the customer type specifically. We have five areas of customers that we address — MRO, OEM, contractors, retailers and institutions — so we can give a more granular view of the future. The four scenarios are linked to those specific areas so [distributors] can see the possible impact to their companies on a very targeted basis," he said.

Industry consolidation and technological advances continue at a rapid pace despite the recent downturn in the economy, Schreibman noted, and that makes it imperative for companies to incorporate more strategic planning. To do that, they need detailed information that includes specific actions and options about the best plan of attack.

"[Consolidation] has slowed somewhat, but you read constantly about companies being acquired — and the phenomenon of foreign companies buying U.S. companies continues to make a strong impact on the industry. With this report, we've gone a step beyond describing broad trends as we have previously. We now target specific scenarios by customer group," Schreibman said. "Technology, of course, moves so rapidly that it also presents a good reason to publish the report more often."

In three years, NAW will produce another vital report in the series, Schreibman said.

"Our members agree that this has become an important part of their strategic planning," he said.