They have many names — buying group, marketing group, consortium, alliance, to name a few. They have many functions involving the needs of distributors who belong, manufacturers who participate and end-users who reap price-and-delivery benefits. However, distribution groups all have one goal in common: to help members become more competitive in a rapidly consolidating sales and service industry.

From comprehensive sales training to consolidated buying power to automated management services, buying groups address the business concerns of independent distributors while allowing them to keep their most precious commodity — their independence.

Independence is important to more than just industrial distribution companies, which wage a customer service battle daily as the middlemen between manufacturers and end users. Inc Magazine reported recently that independent-business alliances are gaining momentum in many industries, such as advertising, and are growing through innovation.

"By joining forces, they're finding freedom," says Inc writer Susan Greco.

All the groups discussed here offer some basic benefits: buying and marketing power, computer technology assistance, and help participating in national and regional contracts, to name a few. But each has its unique perspectives and membership criteria that make it attractive to certain distributors.

However, executives of alliances say there are responsibilities in belonging. Members' participation in meetings and planning sessions, and their willingness to offer ideas, are at the heart of successful organizations.

The ability to make or break one's business fortune through entrepreneurship is as fundamental to industrial distributors as it is to any other American business segment. The conglomerate purchase of distributorships is epidemic, according to marketing group executives. The growth has slowed in the last 24 months, but continues nevertheless. Small distributors struggling to remain independent look for ways to empower their organizations without giving up precious autonomy. The answer in many cases is joining a buying group.

The following is a sampling of the types of groups seeking new members and affiliates.

Groups come in all sizes and have various operating credos. Some are specialists. The Evergreen Marketing Group and iPower Distribution are both specialists, but in different ways.

Evergreen Marketing was formed to assist a particular distributor category — in this case, construction tool and fastener distributors. Six distributors began Evergreen in 1989 to help educate their employees and managers, and form partnerships with key suppliers, according to executive director Kevin Higginbotham.

"It was founded on this basis: that distributors and manufacturers can work together toward common goals and develop programs that can change with changing times," Higginbotham says. "The founders wanted people who can make a difference in the industry and become heavily invested in growing collectively."

For that reason, the organization's membership of 68 is small by comparison to some groups. Managers of Evergreen Marketing, which is based in Carrollton, Texas, want members to be active in the group, attending partnership meetings and offering to be trainers, in turn. Many members hold demonstrations and tours at their own places of business.

With 75 preferred vendors on the rolls, annual marketing meetings can almost be one-on-one experiences for everyone involved, Higginbotham noted. But the most important programs of all may be the ones held by distributors, for distributors.

"One of the key aspects of our training program is to identify and share best practices," Higginbotham says. "We look for a program being successfully run by a distributor — a profitable tool repair operation, for example — then hold a workshop for members at the location for first-hand training and discussion."

Evergreen's training operations are focused on a triad of programs: product and applications schools, best practices business forums and selling skills seminars. A big part of learning is hearing from customers about what they expect from suppliers.

"One of the most successful sales programs we had was bringing in a buyer from a large contractor. He explained what he needed from a salesman calling on him, and how that salesman could prepare before a visit," Higginbotham says.

iPower Distribution Group, based in Westborough, Mass., is a different kind of specialist, says CEO J.D. Sullivan, Jr. The group's main function is as a marketing and back-office tool, he says. The group, which began life as the industrial distribution arm of Parker Hannifin Corp., sponsors national and regional supply accounts with an emphasis on custom-crafted supply solutions.

"Sales tools that help distributors deliver services cost effectively are a necessary adjunct to any group," Sullivan adds.

iPower was organized to provide products and services with the power of a first-tier supplier. Unlike pure integrators, iPower members are able to provide a top level of technical support, Sullivan says. In that way, independent distributor members can participate in national contracts from which they would otherwise be shut out.

"Vendor consolidation and rationalization is a reality in today's market. Small and mid-size vendors need iPower for yet another marketing tool and program," Sullivan says.

The company operates proprietary e-commerce software systems for over 175 distributors representing $11 billion in sales. iPower provides all types of MRO supplies including electrical products, Sullivan says.

Two new groups, IBC-Industrial Supply Plus and the National Supply Network, grow by offering the latest technology and the ability to join national contract sales agreements. They have differing business approaches but the same goal: to help distributors get the power of group participation.

Like Evergreen Marketing, IBC-Industrial Supply Plus is a specialty group. Formed three years ago as Industrial Buyers Consortium, this marketing group specializes in helping cutting tool/abrasives distributors, and bearing/power transmission distributors, with their needs. In November, 2001, IBC allied with Canadian group Independent Distributors, Inc. A specialist in bearings, IDI helped IBC begin recruiting bearing distributors in the United States. Today, IBC has 177 bearing distributor locations and 114 other industrial supply locations, according to president Ed Sullivan.

Membership in IBC is fee-based. The group has distributor members in North and Central America and the Caribbean islands.

"Our focus has gone from the buying side to marketing — taking a cohesive group of distributors and presenting them for national contracts," Sullivan says.

IBC has a set of preferred suppliers, and part of the group's job is to help distributors sell preferred lines to end users of competitive products, Sullivan says.

The National Supply Network is also a new organization, created in 2001 by executives with considerable industrial supply experience, says general manager Dan Fazio. A division of Ace Hardware Corp., Connoquenessing, Pa.-based NSN set a goal early on to provide members with top-notch technical programs that support every aspect of the independent distributor's business. The growing group has 23 distributor affiliates in 16 states.

However, NSN's management isn't new to distribution, Fazio says. He has 28 years experience. Managers average over 10 years in distribution. The target group for NSN affiliation is in the $7 million to $20 million range. NSN does not call distributors "members" because they don't actually join and don't buy stock in the cooperative, Fazio says.

Both of these new groups have big plans for technology that will benefit suppliers and distributors alike. IBC has an extranet in place, joining suppliers with members.

"It's a real-time resource including news, information, training and other resources, and systems integration," Sullivan says.

NSN also brings the latest computer power to the table.

"We're very heavily into technology, with several products and services for our distributors that are unique. For example, we have distributors who came on board mainly for our product database," Fazio says.

Front-end Internet tools, Web site building and a windows-based master quoting system are some of the services available to distributors.

"The services are designed to help distributors be better positioned in today's marketplace," Fazio says. "We view this as a network, not really a marketing group or buying group. Such technologies give independent distributors the ability to act like a national chain yet maintain their independence."

NSN's management, in collaboration with affiliates, focuses on regional key accounts. National contract accounts will come later, Fazio says.

"We provide support for every aspect of distributor activities," he says. "The difference is, we have bricks and mortar support in the form of 15 stocking locations. With these and other initiatives, we channel the driving force of end-user needs through affiliates."

Two examples of large groups underscore how a huge supplier/distributor network can still manage to focus on the buyer-seller relationship. InCom Distributor Supply and TruServ Corp. stock hundreds of thousands of products. Their purchasing power, combined with technology, allows every distributor to react to customers' needs fearlessly, say their principals.

InCom Distributor Supply is the commercial/industrial division of Do It Best Corp., one of the largest retail hardware organizations in the world, according to Marty Bailey, general manager. InCom has $2.5 billion in sales, is debt free and has the highest sales-per-employee ratio in the industry, Bailey says. He points out that InCom's priority is to make and deepen lifelong relationships with distributor members.

"Our financial stability is one key to cementing relationships with small, independent distributors who are our target members," Bailey says.

InCom is a buying cooperative, returning all the profits to members in the form of rebates, he says. The membership is thereby not only sustaining the buying power of the group at large, which keeps prices low, but benefits from consolidated billing by InCom.

In the final analysis of alliances and groups, the ability to do more for members is the reason for joining, Bailey says. InCom has 400 members purchasing from seven warehouses that stock 68,000 SKUs. The organization offers training sessions, warehoused and non-warehoused product catalogs, a full-functioned B2B Web site, and regional marketing plans.

InCom supplies standard or custom product catalogs imprinted with distributors' names. They can be combined with targeted fliers, monthly or quarterly. These, in turn, can be sent to regional, zip-code analyzed potential-customer lists, or shipped to distributors.

InCom's average distributor member is small. The company targets $2 million to $10 million specialty and general-line distributors. One of InCom's main objectives is to source products and assist members with quotes so they can focus on the relationships they have with their customers — distributors' main reason for being in business in the first place, Bailey says.

TruServ Corp. is a large group of independent industrial, commercial and retail establishments. The cooperative consists of 152 industrial distributors, about 500 commercial hardware members and 450 stand-alone rental facilities. In addition, there are 300 independent retail nurseries. The organization also includes some 1,200 sales and rental locations within other stores.

Induserv Supply is the industrial distribution arm of TruServ. It began in the late 1980s, redirecting the industrial goods segment of TruServ to independently owned general and specialty industrial distributors, according to Fred Kirst, vice president, MRO.

"The company is a hardware co-op moving aggressively into the industrial market," Kirst says. "We brought people into management who are specialists in distribution. We are not ignoring the hardware market, but the two markets are different."

The company's marketing strategy is as big as its membership, Kirst adds, with 1,200 contract pricing programs aimed specifically at allowing distributors to buy at the best possible price. The strategy includes a process whereby distributors, if they are able to compete on price and delivery, can go after business that is not necessarily their core competency, adding lines and growing accordingly, Kirst says.

"An example is janitorial. The JanSan business is growing and we are starting to add those products as a specialty," he says. "The distributors now growing the most by selling those products were not janitorial/safety distributors."

Delivery of stock products comes from 12 regional distribution centers, which stock about 62,000 items.

TruServ management considers the company a flagship in technology, with a comprehensive program of sales and management software programs and Internet portals. Distributors can customize catalogs with up to 30,000 of the stocked product SKUs available. By early 2003, Kirst expects to be able to create catalogs from all 387,000 SKUs available from vendors.

On the supplier side, vendor managed data is an information connection by which new products, price changes and other updates will be automatically downloaded by vendors to TruServ within 48 hours. With a touch of a button, distributors can download the information into their systems, Kirst says. Members can also see invoices posted daily and pay online.

Training on all these systems is available in a number of ways, says national sales manager Marty Daley.

"One of the important aspects of any group is its ability to train members," Daley says. "There is monthly hands-on technical training."

Every new distributor has an implementation team from TruServ, which coordinates system setup and training. TruServ has an 18-member distributor advisory panel, half from commercial and half from industrial members.

The consensus among managers at buying groups is that independent distributors need all the tools they can muster to thrive in the future. Will the independents die out? Probably not. For decades, they have battled threats like increased direct selling, integrated supply and the marketing of low-priced, competitive merchandise. They continue to face consolidation of their peers.

However, the groups agree on one point they consider most important of all: the knowledge gained by distributor personnel through years of dealing directly with their customers has no substitute. By catching up on Internet technology and gaining the buying power offered by group representation, independent distributors will not just survive, but thrive.