Industrial distributors come in all shapes and sizes, and any observer of the industry will tell you that bigger does not always mean better.
Smaller outfits often have the ability to carve a unique path based on nimble and effective business operations — and many times, they don’t do it on their own.
In the most recent Industrial Distribution Survey of Distributor Operations, 41% of respondents told us they were members of a buying group, and 9% said they were members of a coop — figures that speak to the robust offerings available in this sector. These groups, which exist to enhance the purchasing power, relationship-building and marketing efforts of independents, have become indispensable to their strategies as they compete with bigger outfits with more resources.
With multiple strong buying groups and coops representing top companies in this market segment, there’s a lot of knowledge to be gained from tapping into their observations. We chatted with group leaders to learn more about what they’re seeing in today’s industrial distributor sector.
Today, a visit with Ronald R. Nuñez, president and COO of IBC.
Industrial Distribution: Tell us about the biggest goals your members have right now and how your group is assisting them in achieving those goals.
Ronald Nuñez, IBC: The goals our members have focused on are technologically driven. Many IBC distributors, over the last year, have or are in the process of upgrading their ERP systems. Seeing so many members upgrading their systems is excellent, all in the spirit of driving additional internal efficiencies. To that end, IBC has recently launched a member’s ability to send Electronic Purchase Orders through IBC Connects, an entire EDI Purchase Order to payment platform managed by IBC. We are very proud of the IBC Connects initiative, designed to streamline transactions between members and suppliers while taking cost and waste out of the channel.
Another big goal for IBC members is to offer e-commerce to their customers.
Today, many members are in different stages of their e-commerce journey. We learned that gathering and managing the data for an e-commerce site is one of the most complex and expensive parts of a successful e-commerce operation. IBC recognized this challenge and developed a program where members can share the expense of harvesting and managing data. Today, the IBC PIM (Product Information Management) initiative helps harvest data for members while the software helps to manage content-rich data.
In essence, members access an electronic catalog full of over 1 million SKUs of content-rich data representing over 180 suppliers for use within a member’s e-commerce site.
ID: What is the most critical resource you believe distributors need to be utilizing for success amid challenging business conditions?
RN: Investing in technology will play a big part in navigating challenging business conditions.
We all are doing more with less, and technology can certainly help. In addition, it is also getting more difficult for distributors to hire for roles within their organizations. As a parent with two students in college, I learned about a website (joinhandshake.com) that connects students (both undergraduates and masters candidates) to employers looking for interns or full-time employees.
I was surprised at how quickly we began to see students’ interest in one of our recent job postings on Handshake. We had several great candidates and found a great hire that recently finished his undergraduate program. What is most interesting about handshake.com is their target approach as an employer; you choose 10 schools you would like to target. For example, Texas A&M offers a program for industrial distribution, or The Catholic University of America offers a sales/sales management minor. Depending on what role you are trying to fill, why not look for well-rounded students with a specific concentration? I hear from our members that it is difficult finding employees to fill positions, and on the other hand, there are many students, including students with masters degrees, seeking employment. I believe that handshake.com can be of tremendous value to many organizations.
ID: What do you expect for 2024 and how should distributors prepare?
RN: There is a slowdown happening that will continue through 2024. Distributors might consider investing in their businesses now and through 2024 in preparation for a more positive 2025. As a result of our continued expansion of the IBC Connects platform, we have an interesting perspective and have seen several distributors and suppliers, over the last 12 months, upgrading their ERP systems to support EDI better. We see this trend continuing as more and more businesses are looking toward technology to gain improvements and efficiencies that, once complete, will pay dividends well into the future.