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Another year is just about in the record books. We hope you have participated in the strong economy and have been able to bank some profits to be used in future times. Profits from 2018 are your war chest for 2019, assuming you retained some of the earnings.
The nice thing about profits is they are the multipurpose, one-size-fits-all elixir for businesses in good times and in not-so-good times. In the good times, it is the economic energy drink used to grow and strengthen the business. In bad times, it is the antibiotic that allows a business to heal and recuperate from corporate ill-health.
Of course, 2018 profits do matter as you look to 2019. They can be used this year to kick-off 2019 projects. They can be paid in bonuses to team members who truly performed above and beyond expectations.
When paying bonuses, carefully determine the contributors and the A10Ds — “attendees” or people who reliably show up every day. We think it is a mistake to bonus A10Ds as you would provide bonuses to the people who “bust it” for the company. When the people who made a difference aren’t treated better, they will look for a company that appreciates and rewards them.
Employee, Customer Engagement
At the beginning of each year, it is always good to reflect upon the last year. Determine what you will do the same, what you will do better, what you will stop doing and what you will change altogether. We’ve provided, as we do most years, a simple “punch list” of thoughts for you to consider in the coming year. We expect each of you will build your own punch list and fine-tune it to the realities of your situation.
• Managers must consistently “walk the talk.” Team members carefully listen to and watch what managers say and do. First, they use their observations to shape how they conduct themselves in the performance of their jobs. Second, they use their observations to assess the sincerity of the executive and management team in their establishment of rules and policies for the operation of the business.
While it is unfair that managers must operate in a fishbowl, it is the reality. The team uses any imperfection to legitimize their imperfect performance or deviation from rules and policies.
• Managers should consider the optics of the management team. Optics has become a popular term as the nation approached the midterm elections. Many candidates became more concerned with managing the appearance of their record and their opponent’s record versus any relationship to reality.
The managers in your distribution business must walk the talk and control the optics of their performance. It’s no longer enough just to do the right thing, it also must appear you are doing the right thing. A two-hour lunch with a customer might be the right thing to do but be perceived as a boondoggle by your team. Coming in late because you had an early meeting with a customer might be the right thing to do but not understood by your team. As we said before, it’s not fair, but the optics drive a lot of decisions and actions.
• Managers must set a consistent example of respect for individuals. Respect for other team members. Respect for customers. Respect for suppliers. Here’s the tough part: respect to their face and behind their back. In our experience, when managers are respectful to a customer’s face and then disparage them behind their back, that disrespect becomes an organizational disease, eventually coming to the surface in team members’ dealings with the customer.
• Operational excellence required in all areas. In past columns, we have discussed the need to build a team of functional experts. Marketing experts. E-commerce experts. Inventory experts. Logistics experts. These experts must be tasked with the creation, maintenance and execution of best practices used in the operation of mission-critical functions.
We have warned about the difference between true functional experts and expert self-promoters. Compare yourself to industry metrics. In many areas, the high-performance wholesalers operate in the top 5 percent to 10 percent of their peers.
• Assemble a team of the best and brightest. The wholesale distribution industry is talent-intensive. In the coming years, we and economic forecasters have warned that full employment is a double-edged sword. It represents economic success and growth while creating labor shortages — shortages of the very raw material our companies will need to take advantage of the thriving economy.
There continues to be a pool of smart, hard-working people who are looking for the kind of work experience our industry offers. Of course, a group within the labor pool is looking for glamorous, high-intensity, high-risk and high-reward jobs with big high-flying companies. However, we believe people who are just as smart and hard-working are looking for a situation our industry can provide. The challenge for wholesalers is to build a process for attracting, identifying, hiring and retaining those people.
Obtaining a team of the best and brightest also involves acknowledging and addressing any hiring misjudgments made in the past. Any company whose hiring process ultimately results in batting over 500 is probably kidding itself or has very low expectations. In our company, we expend a tremendous amount of time in the hiring process and our net is probably still around 500.
Always review your processes for hiring and firing with your labor attorney before acting in either situation. Companies who fail to heed this recommendation often get the opportunity to talk with their labor attorney in a much more expensive, stressful environment under duress.
• Convenient, fast and reliable customer service; how does your company stack up? We’re sure you have noticed that the shopping process has changed radically over the last five years. Shoppers are fully embracing this newfound option to shop electronically and have their purchases delivered in an acceptable period of time.
Delivery is everywhere — groceries, subscription meals (where companies ship the ingredients to your home and provide a recipe for you to prepare) and warehouse clubs. Retail stores and restaurants will bring your purchases out to your car if you select “pick up” while ordering online.
In our area, DoorDash, a national food delivery service, will deliver the food from 48 restaurants to our house with “free” delivery. (Free is a misnomer; it means the restaurant includes the delivery charges in the stated price.) Delivery times are updated in real time and shown in minutes. The menu is provided for each restaurant, a selection is made, customers can then login using their Google or Facebook account, enter a tip for the driver and complete the transaction with a credit card.
The delivered price is more than double the in-restaurant price yet the concept is working. It seems a lot of folks would rather spend their time binge-watching “Game of Thrones” reruns than going to a fast-food restaurant.
Easy ordering, real-time information including delivery estimates and, in some cases, guarantees with a cost premium will filter into our industry. We know contractors are struggling to find reliable helpers and trainees, much less qualified techs. The smart contractors know their future hinges on the productivity of those techs.
They also know that squandering a tech’s time ordering and running to supply houses is a huge mistake, so they will be partnering with wholesalers who can conveniently and reliably increase a tech’s productivity.
Convenient, fast and reliable are part of earning a customer’s day in, day out business. The challenge will be to determine how this shopping trend will play into wholesaling. Some prognosticators predict that traditional brick-and-mortar stores will not be economically viable in the future — in retail or wholesale distribution. While we tend to agree with this forecast, we are uncertain how quickly the trend will evolve.
• Get your e-commerce initiative going. Surprisingly, some wholesalers still don’t have a legitimate e-commerce offering for their trade customers. We use the word “legitimate” because having any old webstore is not the same as having an online store that customers in the industry can use as a tool to perform their job duties.
Millennial’s who are moving into key positions in all industries run their lives and businesses with their smartphones and, to a lesser extent, their tablets and PCs. Very few viable contracting companies operate without one or more computers in their business. To ignore this fact forces customers and respective customers to use other suppliers.
We quoted economist Alan Beaulieu in our January 2018 column: “The second half of 2018 and into 2019 will provide a great opportunity for improving efficiency, much-needed e-commerce efforts, new marketing plans or a new location. Plan now because the time to implement will be here in a flash.”
Did you see the flash? The time to implement is here. As you prepare to enter 2019, take a few moments to think about what you will do the same, what you will do better and what you will do differently to make it the best year possible for your company.