By Jack Keough
One of my favorite philosophers of all time is retired New York Yankee’s legendary catcher, Yogi Berra. Yogi was famous for uttering a number of Yogi-isms that have made him one of the most quoted persons of all time. Two of them are applicable to business today: “The future ain’t what it used to be” and “If you don’t know where you are going you might end up somewhere else.”
Yogi was right.
Years ago manufacturers produced products sold through distributors to long-time customers. Many of these distributors assumed they’d have these customers for the foreseeable future: like Polaroid, for example.
Well, as Yogi said the future has changed and the question now is: Who will be your customers in the years ahead? What industries will be growing and what sectors will be cutting back?
These aren’t easy questions to answer but they’re ones that should be brought up at strategy meetings in distributorships throughout the country. As someone who has been writing about distributors for some 30 years, it amazes me that many (certainly not all) have no strategic plan in place for where they want their companies to be in five years.
Are you selling to the same customers you were selling to five years ago? What percentage of your products are “new products” that have been created in the past five years? Do you have the right salespeople on board with the technological abilities to meet the needs of “new” younger millennial buyers? Where are you going to find the talent you need as many baby-boomers retire?
These are questions that also must be answered by manufacturers who understand they are going to be facing a major challenge as many of their employees will be retiring in the next few years. In fact, one study showed that the average age of an employee on the plant floor is 56. Who will be taking the place of these soon-to-be retiring employees?
This is from a report on manufacturing produced late last year by the McKinsey Global Institute: “Two key priorities for both governments and businesses are education and the development of skills. Companies have to build their R&D capabilities, as well as expertise in data analytics and product design.
“They will need qualified, computer-savvy factory workers and agile managers for complex global supply chains. In addition to supporting ongoing efforts to improve public education—particularly the teaching of math and analytical skills—policy makers must work with industry and educational institutions to ensure that skills learned in school fit the needs of employers.”
In addition, manufacturers are going to need to be more innovative in bringing new products into the channel. New products are going to be the catalyst to drive sales.
That means more money for R&D and consulting with customers and distributors to determine how their existing products can be improved.
Several years ago, I interviewed a top executive with an electric motor manufacturing company. He told me that more than half of their revenues were coming from products that had been introduced in the past five years.
These comments made by Charles M. Swoboda, Chairman and CEO of Cree Inc., reflect the changing role of manufacturers and their outlook. Cree, as you know, is a manufacturer of LED lighting, a company has introduced many new innovative products in the past several years.
Swoboda, in a conference call with analysts after delivering Cree’s quarterly earnings statement, says Cree is “not trying to be a traditional lighting company. We’re a technology company, developing products to fundamentally change the lighting experience.
“…We remain focused on using new product innovation to drive our growth by taking share from traditional technologies.”
As an electrical distributor you don’t just sell electrical products. You sell your knowledge and expertise as to how these new products can be used to increase the productivity and efficiency of your customer’s business operations. And that means distributors will need to increase their budgets for training.
As Yogi said the future ain’t what it used to be but if you take the time to strategically plan you may end up being where you want to be and not somewhere else.
Jack Keough was the editor of Industrial Distribution magazine for more than 26 years. He often speaks at many industry events and seminars. He can be reached at firstname.lastname@example.org or email@example.comTagged with tED