2013 NAED Annual Recap

Earlier this month we met with distributors and manufacturers at the NAED Annual in Boston.  Reportedly over 700 people registered for the conference (doubtful all attended).  The layout of the hotel (multiple lobbies, Marriott Copley doesn’t have the easiest layout for a large meeting) made it difficult for it to feel like that many attended, but many were in suites, some high level manufacturer and distributor senior management flew in for a day or so (and no one saw them) and local distributors had a number of registrants.  Additionally, it seemed like some of the national chains had significantly more attendees than normal (perhaps took advantage of everyone in one place for company meetings?)

Unfortunately, what was missing was a number of small to mid-sized manufacturers and distributors.  And with only a 2 day meeting, we heard a number of comments of “not enough time to meet with people” hence didn’t attend or attendees commenting about value for their investment.

Regarding seminars … don’t know as didn’t attend and didn’t hear feedback from anyone who may have attended (“if a tree falls in the forest and no one hears it …”)

Anyways, to feedback and observations, in no particular order:

• Many distributors and manufacturers reported business as “slow” or “sluggish”.  Some backlogs were growing.  There is “hope” for a stronger second half, however, no one could express why they had hope.  Distributors in larger markets reported business as more robust. As companies migrated from major population centers, distributors reported a sense of “malaise”.  Those in petrochem (shale) areas reported robust business (not surprising) and companies focused on energy efficiency also reported better than average business.  Manufacturers who are in the resi market were “high fiving”, but unfortunately this isn’t enough to drive the overall market for most distributors with resi representing only 8-10% of industry sales (and many distributors no longer servicing that market.)
• Technology was a continued topic of conversation, especially as it relates to ecommerce (web and mobility) and generational change.  ElectricSmarts presented its app building capability (haven’t seen, just heard about). IDEA is seeing increased interest, and awareness, in the value of product data attribution to support eSales.  Reportedly some companies from outside the industry (tech companies and distributors) have expressed interest.
• From discussions it appears that the product data and product access issues are changing due to the continued emergence of alternative channels such as AmazonSupply, AutomationDirect, Grainger, Google Shopping for Suppliers and more. These companies are asking manufacturers for electronic product content and marketing materials (spec sheets, graphics, etc) and more. Manufacturers are giving it to them (and hence these companies have an advantage over electrical distributors) and these companies are not bound geographically to “authorized” territories.  Reportedly AmazonSupply asked Schneider Electric (Square D) for tens of thousands of SKUs whereas Schneider offer <500 .="" font="">
• This becomes interesting as AmazonSupply looks at this as a “bits and bytes” issue (storage space) as electrical distributors look at it as physical inventory. It then begs the question of should / are distributors investing in eSales (through their ERP provider or someone else) and mobility or will they cede the market to others like they did the resi / resi contractor market to Home Depot and Lowes? If you were/are a manufacturer, what would you do?
• Interesting General Session … no NAED emcee or commercial! Clarence Martin, outgoing chair, facilitated the session well.  The keynote speaker was Zanny Minton-Beddos from The Economist.  We heard mixed about her afterwards. Session was good as she touched on the US economy and some of the worldwide economic drivers.  She used the phrase “sluggish” to describe the US economy.  Key US trends, according to her are:
• residential / housing
• shale … as it drives investments in chemical and energy driven / cost-oriented industries
• exports (34%+ of exports are from companies with <500 employees.="" font="">
• value-added businesses (i.e. video games, consulting, etc) – industries where people are the product.
• A highlight of the General Session was a panel moderated by Michael Marks that had Jayne Millard (Turtle and Hughes), Chris Hartmann (Rexel), Tom Gross (Eaton) and Neal Keating (Kaman).  Some observations

• All have industrial backgrounds and some tie to Rockwell
• Many in the audience did not know Kaman!
• All felt that distributors of tomorrow need to have expertise resident in their business vs. being solely fulfillment-oriented.  Providing solutions is important.
• For industrially-oriented distributors, having more engineers is important (which says something about the ability to control one’s own destiny and the deployment of manufacturer resources.)
• Offering a broader offering along the power continuum was a theme from Chris Hartmann and reinforced by Neal from Kaman (which is into the power transmission and fluid power industries).
• Everyone emphasized the need for continued technology innovation to support customers and the need for greater internal technical expertise as products become more technical.
• There is a need to decrease logistical costs to free up monies for expertise.
• Project management will continue to grow in performance as will the usage of project management software. Tom Gross mentioned the Project Management Institute as a resource.
• Tom Gross and Chris Hartmann both mentioned that it is important to “pick the ‘right’ partners” to improve efficiency.” (This then begs the question of “what efficiencies to focus on and how to measure them?” Should distributors include this in their supplier due diligence and how can this be done through reps?)
• In talking about the customer of the future, all felt that the customer will seek information online and that relationships will also include virtual relationships.
• CMG Note:  This is an interesting concept, and we agree, however, the customer must first hear of the product, or potential of a product, somewhere in order to go looking for it.  Perhaps in online forums or perhaps manufacturers will get better with PR and marketing as core disciplines.  For distributors to not lose their role as information providers, online business models need to be developed that facilitate the distributor as the source of information for their marketplace (and yes, we know some resources to accomplish this).
• Comment / Question – if Kaman is at the NAED meeting, on the stage, one may presume that they are, or are looking to become, an NAED member. Obviously this should be no problem as they are in the electrical distribution business with their purchase of Zeller Electric and Minarik.  But it begs the question … could Grainger? could Anixter? could Arrow? could AutomationDirect? could AmazonSupply? How about DigiKey?  All would probably qualify.  Could it be a recruitment opportunity for NAED?
• A word that was used repeatedly throughout the meeting was “agile”.  Jayne Millard used it first at the opening session panel.  Gary Arnott from GE used it in his presentation at the GE breakfast and we heard it a couple of more times. In today’s marketplace, being agile and innovative are critical to outpacing your competition.