Guest Editorial
Guest Column
Focus Your
‘New Normal Angst’
by Bill Wade
Wade & Partners
“G
entleman, you have
come sixty days too late.
The depression is over.”
Sound familiar? This was actually Herbert Hoover,
responding to a delegation requesting a
public works program to help speed the
recovery in June of 1930.
Like many distributors back then,
distributors today have almost taken
growth for granted. When recessions
slow and financial crises erupt, they
generally have been regarded as the
exception, temporary departures from
an otherwise steady upward heavy-duty
market progression — bigger truck
fleet, increasing average age, blah, blah.
However, it should be increasingly clear
that the current downturn is fundamentally different from recessions of 2007,
2001, 1991, 1980 or 1973. Between January
2008 and December 2009, distribution lost
467,000 jobs. Who knows how many from
the heavy-duty sector? This is not merely
another bump in the business cycle, but a
restructuring of the economic order.
For some organizations, near-term
survival has become the only agenda item.
Others wonder how to position themselves once the “flat spots” have passed
and things return to normal.
The question is, “What will normal
look like?” What we will find on the other
side will be foreign. The new normal will
be shaped by a confluence of powerful
forces — some arising directly from the
recent economic dip and some that were
at work long before it began.
The recently published National Association of Wholesalers study, Facing the
Forces of Change: Decisive Actions for an
Uncertain Economy, is the only research
series to analyze the future of distributors
in multiple lines of trade. It has provided
very accurate insights since the first study
in 1983, so you will want to pay attention.
It counsels that to confront the new
economic environment, distributors must
firmly grasp unconventional opportunities.
The Expanding Role of Services: Service must be seen not just as a source of
incremental revenues, but as a source of
competitive differentiation vs. peers, OE
dealers and non-traditional (automotive,
industrial, internet) competitors.
Services are the single best instant tool
to reinforce customer retention, create
incremental product sales and contribute
to distributor net profits.
WDs need to continue to expand their
service offerings into new areas of value
creation, outsourcing and integration,
customer-managed inventory, recycling
logistics, light retrofit planning, design,
installation and kitting and assembly.
Differentiating with Analytics: Customers’ and suppliers’ execution of new operating models increasingly utilize software
as a service technology as a critical enabler.
Quick payback is generated by customer
segmentation, price/yield management,
workforce and network optimization.
No return on investment can compete
with information exposing which customers, products, services and suppliers are
the most profitable at a granular level,
most volatile over time, most strategic to
our business and most costly to serve.
Leveraging Human Capital: The
growing importance of this skill set is
being driven by distributors selling a more
complex value proposition to customers
with ever-higher service expectations.
A more intense than ever competitive
environment is compelling companies
to extend their geographic, industry,
product and service coverage.
Core skills required continue to
evolve, while industry demographics
reflect an aging workforce. Qualified
service techs will see wages rising at
three times the industry average.
The Growing Role of Information
Technology: Distributors must leverage
information technology as they look to
transform their organizations, especially
by capitalizing on web-enabled capabilities, simplifying supply chain and
operational complexity and exploring
alternative delivery and pricing models.
This much is certain: when we
finally enter into the “post-flat” period,
the business and economic context
will not have returned to any pre-crisis
state. The result will be an environment
that, while different from the past, is
no less rich in possibilities for distributors who are prepared.
Bill Wade recently has published a new book titled Aftermarket Innovation. He can be reached at www.wade-partners.com.
The views expressed in the Guest Editorial are those of the author and do not necessarily reflect the opinions, beliefs and
viewpoints of Truck Parts & Service magazine.
4
T R U C K PA RT S & S E R V I C E | J a n u a r y 2 0 1 2