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What Would You Change About the Electrical Distribution Industry?

By Bridget McCrea

No industry or business is perfect, and all of them could use at least a little improvement or honing. The electrical distribution industry is no different, as these three NAED members can attest to. Whether the issue is improving recruitment strategies, encouraging networking among non-competing distributors, or revamping age-old pricing structures, the problems are both real and impactful. Here are six key things that, given the opportunity, distributors from around the nation would change about the electrical distribution industry:

John Gearman, electrical/automation segment manager, Dakota Supply Group (DSG), Fargo, N.D.:

“I really think we’re beating the special pricing agreement (SPA) process to death. When you look at the channel for both parties involved with SPAs, it’s still a very labor-intensive process that goes on within distribution. In most cases, these agreements are decided by manufacturers and distributors and apply to a certain customer and/or physical location. This is an issue that really resonates with everyone. I don’t know if SPAs will ever go away, but if we could shore some of them up and figure out this piece, it would solve a lot of challenges both for distributors and manufacturers.”

“We need better training and education for the people who are working in our trade/industry (both distribution and manufacturing). This is a huge issue right now that I’d really love to be able to change. And while the climate seems to be improving, where are we supposed to find new employees if no one is being trained and if no one is going into electrical distribution? We’re out there trying to solicit new hires and working with 2-year tech programs and colleges, but there’s still a shortage of qualified applicants. This climate makes it pretty tough for the independent electrical distributor and if there were a way to change it overnight I’d do it.”

Doug Borchers, vice president at Dickman Supply, Sidney, Oh.:

“One of the things that’s very frustrating on the distributor end of the equation is that we tend to look out much ‘longer term’ because of our customers or our partners or other entities. However, the electrical manufacturers are focused on monthly and quarterly results so they make decisions about staffing, support, budgets, and other key points off this very short-term thinking. Somehow – and I know that I can’t personally change this – we have to get our manufacturer-partners more in tune with longer-term strategies and away from, ‘How do we stock up on this item so that we can hit our numbers for the month or for the quarter?'”

“There has to be a better way of sharing information with other top-tier distributors from around the country. When I attend an NAED conference or our buying group meetings, I want to be able to network with the best-of-the-best from around the country. I’m not competing with these individuals, but they have figured out issues that I may be struggling with. Or, they may be able to share ideas that I haven’t even thought of. This not only helps my company, but it also allows me to share my own ideas with them. It’s a win-win situation; the tide rises and all boats go higher. Unfortunately, this isn’t how it works. When I attend conferences, most everyone is there to meet with their suppliers and try to leverage those suppliers for better pricing or target programs (or, just go to dinner or play golf). They don’t want to take the time to sit in a room for a couple of hours and pick the brains of some non-competing distributors. In many cases, at conferences where there are 200 distributors in attendance, I find myself sitting in roundtable meetings with six other distributors. Where are the 194 other companies? People just don’t take the time to network anymore like they used to.”

“I’ve had a number of discussions with other distributors about how our businesses just aren’t nearly as profitable as they should be. We’re doing a lot of stuff for a couple of percentage points in net profit at the end. We continue to add services and specialists and do other things for our customers and we’re not getting paid for any of this. Put simply, we’re adding services but we’re not even charging for them. Eventually we’re going to find ourselves on the red side of the ledger saying, ‘Why aren’t we making any money?’ The answer is simple:  It’s because we’re not charging for all of the additional services that we continue to handle for our customers. We, as an industry, need to figure out how to charge for the services that we offer – or, at least get paid for what we do. The value-added services can ‘come along for the ride’ as long as we’re all making proper margins on these additional offerings. What we’re doing is very valuable to our customers. They want these services, but it’s up to us to figure out how to charge for them.”

Rock C. Kuchenmeister, general manager, K/E Electric Supply Co., Mt. Clemens, Mich.:

“We need to raise awareness of the opportunities within our industry. I’d like to see everyone doing a better job of getting the word out to others about the electrical distribution industry and the opportunities that it presents. This would be especially helpful on the recruiting side, where people don’t always see electrical distribution – or, distribution in general – as an opportunity to have a ‘real’ career. This is something that NAED and other organizations, plus electrical distributors themselves, are working to try to change. But it takes time. Really it comes down to doing a better job of getting the word out that distribution is a great place to have a successful career and be able to pay the bills too. It’s a simple message, but it’s one that we need to spread around a little more, especially in this tighter labor market.”

McCrea is a Florida-based writer who covers business, industrial, and educational topics for a variety of magazines and journals. You can reach her at bridgetmc@earthlink.net or visit her website at www.expertghostwriter.net.



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