SPECIAL ISH NA REPORT: ASA Positioning For Future Growth
By Pat Lenius
The American Supply Association's annual meeting held in Toronto beginning Oct. 29 carried the theme "Supply Chain Summit." For the first time in its history, ASA geared its convention program to its channel of distribution, including the 200-plus vendor companies--manufacturers, manufacturers rep firms, service suppliers and others--that are members of the association, instead of focusing exclusively on wholesalers' interests.
At ASA's opening general session on Wednesday, Oct. 30, Jack Hester, current president of ASA and president of Burlington, MA-based F.W. Webb Co., said that this year ASA has slightly more than 500 distributor members, about half the number of companies that existed 10 years ago. However, as a result of mergers, acquisitions and some strategic growth, the number of locations around the country at which the 500 member companies do business has grown to nearly 4,000, he said.
Also speaking at the general session was incoming ASA President Steve Anderson, president of Omaha, NB-based Central States Industrial Supply. The total number of wholesalers in the United States that qualify under ASA membership criteria is 1,124, Anderson said. ASA hopes to grow its wholesaler membership to 600 in 2003. The association also hopes to expand its vendor membership, which totaled 211 this year, to 275 in 2003.
In the last two years, ASA has decided to focus its energy and resources on the three key areas of education, technology and government relations. Its endowment fund for education is nearing $10 million. The ASA Education Foundation offers various training tools and programs, but some companies continue to resist participation, citing a lack of resources, Anderson said. "Can you really afford not to invest in your employees, who are the single most influencing factor that stands between you and your competition?" he asked.
In the technology arena, ASA has reached a milestone recently with the development of an Industry DataBase (IDB) intended to help manufacturers and distributors realize real, bottom-line benefits, Hester said. Using a secure, password-protected website, wholesalers will have one place to go for a standardized set of numbers to populate their computer systems.
Among the benefits will be automated, timely pricing updates that do not have to be keyed in manually. Benefits to manufacturers include: not having to accommodate various numbering schemes based on distributors' systems; not having to print, mail and distribute pricing updates to customers; and maintaining control over their own product content.
ASA's initiative in government relations involves a full-time advocacy office in Washington, DC; its Political Action Committee; and its support of the National Association of Wholesale Distributors.
One of the major events of this year's annual meeting was the "Supply Chain Summit" held from 9:30 a.m. to 5:00 p.m. on Oct. 30, at which various speakers, including panels of manufacturers and wholesalers, discussed how the industry can move forward. Adam J. Fein, president of Pembroke Consulting and manager of the "Facing The Forces Of Change: Future Scenarios For Wholesale Distribution" project, introduced and concluded the summit and moderated round-table discussions. Much of the talk at the summit centered on the industry's need to embrace technology and improve communication between the channels.
Robert Machaby, senior vice president/vendor development at Hughes Supply and one of the featured speakers, said that prior to entering into Electronic Data Interchange arrangements with vendors, Hughes discovered that 40% of all purchase orders it issued contained a mistake, and it cost about $70 to fix each of those errors.
"We went from having EDI with fewer vendors than you can count on one hand to more than 500 of our top vendors," he said. "Today about $1 billion of our volume is done through EDI."
The industry has to change its perspective about information technology, said Rex Martin, chairman/president/CEO of NIBCO, who participated in a manufacturer panel discussion at the summit.
"We used to view information technology as a cost of doing business, and we did everything we could to reduce that cost," Martin said. "Five to seven years ago we changed our approach, saying information technology is something we need to invest in to improve productivity. Since then we have reduced our inventory by $40 million and improved our fill-rate, from 88% to 95%," he said.
Scott Martin, president of the Water Heater division of Rheem Manufacturing Co., suggested that vendors and wholesalers need to do collaborative forecasting and develop freight and logistics strategies.
"We are trying to simplify our relationships (with wholesalers) but also make them more strategic," Martin said.
Jeffrey S. Beall, president of American Pipe & Supply Co., a participant on the wholesaler panel at the summit, said, "We know we cannot continue to survive long term without partnering with strategic vendors and investing in technology."
Pointing to consolidation in the industry, Michael Abeling, president/CEO of Consumers Pipe & Supply Co., also on the wholesaler panel, said, "If we want to be among the best of the best, we have to do something now. EDI is just the start. Using web-based technology is another part of it."
Stanley Dreyfuss, director of purchasing for SG Supply Co., also a wholesaler panelist, recommended that wholesalers invite their suppliers' top people to visit their business and see how they operate.