MODERN DISTRIBUTION MANAGEMENT

MODERNDISTRIBUTIONMANAGEMENTTheNewsletterfortheWholesaleDistributionChannelINSIDEVOL.36,NO.14JULY25,2006!continuedonnextpageStrategicPlanningforDistributorsPart2:KeycomponentstoexecuteThissecondofatwo-partarticleaddresseshowdistributorscanbuildandimplementaneffectivestrategicplan.ByBrentR.GroverAsIoutlinedinthefirstpartofthisarticle,asoundstrategicplanisagaugeandtoolforbetterdecision-makingandcanhelpyoucommunicatetoemployeeshowandwhytheircontributionisimportanttothefutureofyourdistributioncompany.Companiesusuallygowrongwhentheyconducttheirannualbusinessplan-ningprocessbecausetheylinktheoperat-ingplanforthenextyeartotheexpectedresultsfromthecurrentyear.Instead,theannualbusinessplanshouldworktowardfulfillingthe“BigHairyAudaciousGoal”outlinedinyourlonger-termstrategicplan.Thoughanoutsidefacilitatorcanbebeneficial,thestrategicplanningprocessissimpleenoughformostcompaniestodoontheirown.Keycomponentsofastrategicplan:1.determineyourdrivingforce;2.defineyour“sandboxes”;3.recognizeyourStrengths,Weak-nesses,OpportunitiesandThreats;4.createaBigHairyAudaciousGoal;5.outlineyourfinancialobjectives;6.pinpointabusinessconcept,strate-gicissuesandstrategicbreak-throughs;and,7.implementyourplan(hardestofall).TheDrivingForceEverybusinesshasasingledrivingforcethatdominatestheenterprise.Forex-ample,thedrivingforceofanenergyproducerisitsnaturalresourcesholding;forafast-foodfranchisorthedrivingforceisitsdistributionsystem;foraTVshop-pingnetworkthedrivingforceisitsuniquesellingmethod.Thefirststepforastrategicplanningsessionisidentifyingthecompany’sdrivingforce.Thisisoftendifficultfordistributors.Manyteamsincorrectlybelievetheircompanies’drivingforceisgrowingsalesorincreasingprofits.Somefeeltheirdrivingforceistechnology,ortheirproprietarysellingapproach.Thecorrectanswerformostdistribu-torsisauniquelydeepunderstandingoftheircustomers’needs,oranespeciallystrongknowledgeoftheapplicationsoftheirproductsandservices.Eitherway,eachdistributorhasone,andonlyone,drivingforcethatisthefulcrumofitsstrategy.Distributor’s“Sandboxes”Eachdistributionbusinesshasaspecificsetofthreesandboxesinwhichitplays:●productsandservices;●customersegments;and●geographicmarkets.Thestrategicplanningteamischargedwithdefiningwhatistobeinsideeachsandbox,andthentoprioritize.Thethreeprioritiesare:grow,maintainandharvest.Anyproduct/service,customersegmentorgeographicmarketbelowtheseprioritiesmustbeleftout.Distributorshaveatoughtimefilteringopportunitiesout;theyfinditdifficulttoassignanyprioritiesotherthangrow.Managersenjoytalkingaboutwhattheircompanieshavestarteddoingrecently,butoneofthemostchallengingquestionsfordistributormanagerstoansweris“Whathaveyoustoppeddoinglately?”Theproductsandservicessandboxincludesthebroadproductcategories(notindividualproducts,linesorbrands)thatneedtobeinthegrow,maintainorharvestcategories.Inadditiontoproducts,dis-tributorsneedtoincludeandprioritizeRexeltoBuyGESupplyfor$725MCombinedcompanyrevenuesof$4.7billioninU.S.putsitamongtopthreeelectricaldistributorswithcompetitorsGraybarandWESCO.Page4TechCaseStudy:FourLocations,OneSystemAlliedValvewantedtosupportsalespeopleontheroadandsynchronizeserviceandrepairoperationswithdistributionfunctions.Page6WernerCompanyFilesChapter11Laddermanufacturersqueezedbyaluminumandrawmaterialcosts,operationalrestructuringincludingmovingoperationsoffshore,andtoomuchdebt.Page7MODERNDISTRIBUTIONMANAGEMENT/VOL.36,NO.14/JULY25,20062!ContactInformationQuestions,comments,articleproposals,addresschangesorsubscriptionserviceto:GaleMedia,Inc.2737MapletonAvenue,#201,Boulder,CO80304Tel:[phone]Fax:[phone]Website:@mdm.comor($189othercountries).Forgroupsubscriptionratesandsitelicenses,pleasecontactTomGaleat303-443-5060.Copyright©2006byGaleMedia,Inc.Allrightsreserved.ModernDistributionManagement®andmdm®areregisteredtrademarksofGaleMedia,Inc.Materialmaynotbereproducedinwholeorinpartinanyformwhatsoeverwithoutpermissionfromthepublisher.Torequestpermissiontocopy,republish,orquotematerial,pleasecall303-443-5060.ISSN0544-6538MODERNDISTRIBUTIONMANAGEMENTFoundedin1967byJ.VanNessPhilipPublisher&[e-mail][e-mail]irectorsoftheIndustrialDistributionGroupKevinBoyleVicePresidentIndustrialDistributionandChannelManagementfortheLoctiteIndustrialDivisionofHenkelTechnologiesLarryGoodeCEOofRTDygertInternational,Inc.JuliaKleinPresidentandCEOofC.H.BriggsHardwa