Event Recap: SPA Mastering Strategic Pricing in a New Economy Seminar in Chicago, IL June 6, 2014

The following are highlights of an article we have compiled a few highlights and data points shared by distribution and manufacturing leaders as well as industry experts for those of you that were not able to attend this informative event.

The event focused on strategic topics of importance to the owners, CEOs, CFOs, and general managers of distribution and manufacturing companies. Experts addressed the topics essential to accelerating the customer value proposition, competitive positioning and market value of any distribution or manufacturing business. Their presentations addressed the strategic, analytical, process and cultural issues that are fundamental to maximizing shareholder value and on the high-level, strategic and structural issues that are easily neglected in the hustle and bustle of daily business demands.

Attendees learned best-practice strategies and tactics to:

  • Achieve faster growth and market-leading profitability
  • Develop stronger customer relationships
  • Maximize your company's valuation
  • Drive real change in sales force culture
  • Break the cycle of undisciplined pricing
  • Build a sales process based on customer value
  • Quantify and Communicate Customer Value
  • Achieve pricing flexibility with discipline
  • Improve operational efficiency with reporting and analytics

Major themes covered at the event included:

  • Now is the time to focus on strategic fundamentals to set the stage for outperformance in the rebound
  • Inflation and pricing challenges are looming; those who don't master pricing will experience a margin squeeze
  • There are significant capital markets opportunities to increase shareholder value today
  • Pricing excellence is a key wealth-maximizing capability
  • Analytics and the information system are key
  • Training drives execution
  • Sales culture and change management are the challenge
  • Prioritization, long-term commitment, and focus are the keys

One of the benefits of attending an SPA Seminar comes via expert analysis of the distribution business. The Chicago event featured an in depth presentation by Jason Kliewer, Managing Director of Robert W. Baird and Company. Each year Baird co-sponsors a series of distribution oriented surveys which provide a candid snapshot of the pulse of our industry. During his presentation Jason provided an overview of the results of the latest polling.

Distributors are more optimistic than last year

  • Industry leaders forecast 5% growth through 2014
  • The same group was forecasting only 3% growth in 2013

Industrial Distribution is working to improve their business model

  • New emphasis has been placed on traditional topics like Integrated Supply and other supply contracts.
  • Identifying opportunities to build fee-based service offerings.
  • Improved data quality and flow within the organizations weighs heavily on many of these distributors' minds. One area being explored is the use of mobile "apps" to enable real time flow of data from a number of applications.

Expansion is driving much of the growth

  • A large majority of the distributors surveyed see geographic and product portfolio expansion as key driver.
  • Since the last recession, distributors have banked on selling more product to the same customers as profitable model.

Consolidation marches forward

  • Many companies searching for acquisition and merger partners.
  • Mr. Kliewer made the comment that publically traded distributors in this sector are seeing numbers which rival blue chip stocks (for instance Fastenal is currently trading at over 20 times earnings).

Change Management in the Sales Culture

Frank E. Hurtte Jr., President of River Heights Consulting, who has 28 years of distribution industry experience and a lifetime in sales and is a senior advisor to over 50 distribution companies, spoke on the topic of "Change Management in the Sales Culture". He discussed how distributors have done a good job of improving their business models and have implemented key new processes in many areas.

"As an Industry we have done a credible job of adapting to the environment around us. "

However, he pointed out that the sales department is still an area that is ripe for improvement.

"The Sales Department - The Last Frontier, or… The Wild West? "

Some of his observations and questions for consideration follow:

  • Fear of customer alienation is still prevalent
  • The Sales force still has very little day to day management
  • Old axioms die hard…
    • "Leave them alone and let them sell"
    • "Our guys have 15 years of experience"
  • Does it make sense for salespeople to set prices?
  • Does it make sense for salespeople to determine what lines are promoted?
  • Does it make sense for salespeople to make decisions on customer investment?

"We need to put process into Sales"

SPA's Dolores Bauders provided an overview of The SPA Pricing Cube which offers executive dashboards with intuitive visual indicators of performance as well as drill downs to actionable detailed data. She discussed how implementing the SPA Pricing Cube can help manufacturers and distributors improve their sales process by helping them:

  • Uncover missed opportunities and lost pricing dollars
  • Rank pricing performance of Sales Reps, Order Writers, Branches, Vendors and Product Categories
  • Understand and manage Pricing Methods Mix
  • Highlight trends as well as monitor and manage performance over time

Most manufacturing and distribution leaders are experts in their field. They understand customer intimacy. They appreciate the need to build strong Supply-partner relationships. They manage the daily operation of their business and understand how immediate competition interacts with their own efforts.

What is often lacking is a detailed view of the industry as a whole. Strategic Pricing Associates' free seminars allow these leaders a wider focus, a bigger view into national and international pressures on their industry. Now is the time to begin thinking about how your own expertise might expand by taking in one of these sessions. Further, the no cost sessions are focused on distribution and manufacturing leaders' concerns and conducted in a way that encourages networking.

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