McCleave: 4 Essentials of Distribution Value

John Wolz

Challenges for small and specialty distributors in the next year include supply chain mania, hyper distribution, the info/tech revolution and the global trade explosion, consultant Bill McCleave Jr. told the National Fastener Distributors Association.
In 2000 the issues were integrated supply, mega-distribution and electronic commerce, McCleave recalled.
Hyper distribution is most exemplified by Wal-Mart, but may include Fastenal and Grainger. “Most of those eventually slow down,” McCleave reflected.

McCleave”s four essentials of distribution value are:
” Position: “Do you have a “big idea” for differentiating your company and yourself in the current and future marketplace?”
” Pitch: “Do you deliver a well developed and consistent message focused on real customer needs?”
” Performance: “Have you chosen critical activities that must be performed to meet customer expectations and have you set performance improvement goals?”
“Performance is the fulfillment of pitch,” McCleave said. “Without it, the pitch is worthless.”
Performance absolutes are “on time; complete; superb quality; as planned, promised and pitched; and profitable.
” Proof: “Do you have an effective system for validating your value contribution to customers?”
McCleave defined value at “that which renders a distributor useful to its customers” and differentiation is “to acquire a distinctive and separate character in ways that matter to customers.”
Even a “mature” market can be profitable. “There are very few companies that remain who make carriage wheels. But those few do very well.”
Distributors don”t necessary have to catch the beginning of a market. There can be profits from any of the traditional market phases of introduction, growth, maturity and decline, McCleave emphasized. “Which phase are we best at?”
Your ideal position is knowing “who is and who will be out there, what they want and will want and knowing your capabilities and potential.”

” What are the requirements of your target customers? Cost savings, revenue growth, productivity, cash flow or asset performance? “Cus-tomers may have different perspective on what is needed,” McCleave advised.

” To be a long term “valued supplier” you must know the customer”s tipping points.
“You can”t be more profitable if you are not more valuable,”
E-mail: bmccleave@aol.com Web: blazingchannels.com \ �2006 FastenerNews.com