"Small Distributors are dead. They are being driven out of business by the giant national distributors and integrated supply." This statement was used to kick off a "cross-fire" style panel discussion at a small distributor meeting a couple of years ago. Needless to say, a lively discussion ensued among the panel members consisting of distributors and manufacturers, as well as the audience of small distributors. The panel session lasted four hours with a group of hearty souls continuing the informal discussion well into the evening.

The spirit and passion exhibited during this session presents a compelling argument for the channel-driven need for strong and viable small and independent distributors. They are survivors and will find a way to fill the niches created by the pressures of business in today's industrial channel.

As a whole, small distributors are a force to be respected. Industry sources state distributors with individual sales of less than $10 million represent as much as $200 billion of the broad MROP channel. This is simply too large a segment of the industrial market to vanish and be absorbed by large national distributors and integrators.

A recent study, commissioned by the Industrial Distribution Assn., and prepared by W.R. McCleave and Associates, indicates a bright future for well-prepared small distributors. A most notable finding is that 87 percent of end-user customers say that size is not important in their choice of distributors. This group of end users valued performance of the distributors and the products they represent as the prevailing criteria for selecting their distributor partners.

As is the case with distributors of all sizes, success does not come without planning. It is imperative that small distributors frequently conduct long-term and short-term planning sessions. Often external forces like economic downturns and plant closings have a greater financial impact on smaller distributors. These roadblocks can play into the flexible/agile nature of small organizations who are capable of stepping outside the box and looking at their operations strategically. Small distributors have answered the bell by recognizing the value they can add to the supply chain. Astute small distributors have abandoned the "old days" of chasing orders, and have begun to focus on their competitive strengths through product specialization.

As judged by all three segments of the supply chain — manufacturers, distributors, and end users —the I.D.A. study indicates that small distributors excel in the following areas:

• Long-term understanding of local customer issues
• Personal relationships
• Quick local response
• Flexibility/agility
• Specialized technical knowledge
• Local inventory
• Close, loyal relationships with manufacturers
• In-depth product knowledge
• Innovation and problem solving skills.

These strengths are valuable not only to the small- and medium-size end user, but also may be extremely valuable to the large integrator struggling to find technical competency in specialized product areas. Small, specialized distributors are especially well suited to participate as second tier integrators and alliance partners. These working relationships give the small distributor the opportunity to compensate for the all-too-common deficiencies found in many small companies — limited technological and financial resources.

As I.D.A. president, I am pleased to report that small distributors are alive and well in our association. Seventy-five percent of our membership is comprised of distributors with under $7.5 million in sales, and I.D.A. is committed to supporting all of our members' needs. A small distributor can turn to I.D.A. for world-class information, low-cost educational opportunities, and two national conventions allowing executives from manufacturers and distributors of all sizes to come together and explore market opportunities.

The future is indeed bright for the distributors being honored in this issue. They have proven that the entrepreneurial spirit is alive and well in our industry. These companies have taken the necessary steps to plan their future and ensure their place in the channel. I am proud to represent this group as I.D.A. president. This segment of industry promises to remain strong into the future.