Industrial distributors like Applied Industrial Technologies have long been considered middlemen who are extensions of their manufacturers or advocates of their customers. Either label denigrates the key supply chain position to which distributors have evolved.

Value-added distributors fill the void created by shrinking manufacturers' sales forces and significant reductions in customers' facility engineering staffs.

Modern distribution means bringing operational and cost efficiencies to customers through a wide variety of products, services and knowledge — everything from inventory management and order/delivery tracking to engineering, consulting and design services, and troubleshooting expertise.

Distributors are uniquely positioned to assess and meet customers' needs with the broad knowledge of product and service technologies from thousands of suppliers. In addition to this product application expertise, distributors use advanced logistics planning and order transaction processes to provide maximum customer satisfaction with minimum asset base.

Today's distributors aren't so much middlemen any more as they are critical synthesizers in the supply chain. What we do with a manufacturer's product — how we purchase, inventory, understand, manage, sell and deliver it — is how we deliver value and distinguish ourselves in a highly competitive marketplace.

When a customer's packaging line repeatedly breaks down, without warning or explanation, distributors can suggest a remedy based on in-depth product and application knowledge — often at a lower total cost.

One customer considered shutting down part of its operations because of high energy costs. Based on knowledge of the customer's operation, we demonstrated how the plant could become more energy efficient by selecting components for the production line, such as motors, gear boxes and variable frequency drive systems, that work together to increase efficiency and reduce operating costs. The plant remained open, with people working and with reduced operating costs.

Developing business systems that allow for a direct customer interface is a way resourceful distributors deliver additional value as the middlemen in the 21^st century. Our customers can view not only the inventory levels in their own storeroom, but also those at the distributor's facilities and the product manufacturer's warehouse. Customers also can go online and review purchasing histories to simply re-order parts without repeating a cumbersome specifying process.

The distributor's role will continue to develop as we support customers who grapple with new and increasingly complex production challenges, particularly in the highly technical arena of systems engineering and design. In addition, we are on the leading edge of business systems to maximize order transaction efficiency and asset management.

Distributors will offer more fee-based, non-product-related services that help customers operate more efficiently and leverage the distributor's unique skill set and knowledge base.

That doesn't mean we will abandon our more traditional distribution role of delivering the right product to the right place at the right time. We continue to assess customers' needs and match them with our suppliers' products and services to improve efficiency, reduce operating costs and increase plant uptime.

There is no better place to be than in the middle.

David L. Pugh is Chairman and CEO of Applied Industrial Technologies.