While national chains are reporting strong growth as they benefit from data centers and all in the industry seeing topline performance grow due to wire pricing, the challenge is that operating costs continue to rise for electrical distributors. So, the top increases (sales), COGS increase due to manufacturer price increases and the embedded cost of tariffs (of course manufacturers reduced them after the Supreme Court decision), and the bottom (operating costs) have increased (think salaries, insurance, gas for deliveries, etc.)

Senior management / ownership as well as branch managers who receive bonuses based upon profitability then say “we need to maintain / grow our margins.

And remember, the industry is a 2-5% net profit business, on average, depending upon whose numbers are used.

I’ve sat in many client executive management meetings where the topic is raised. Everyone asks “how.” Inevitably the decision comes around to either system changes, a memo (or agreement) that “we need to increase margins), and directives to the sales organization or a pricing / purchasing (as they may be responsible for system pricing and price matrices) team.

And guess what the conversation is 6 months from the meeting? (and yes, stock vs project mix does create anomalies as they can change based upon customer needs and business focus.)

The inevitable challenge is the topic of this article … no one owns margin management. While the overall executive management team should have a corporate margin goal, who has functional responsibility to identify margin improvement opportunities?

Scott Sinning has been sharing advice on where distributors can improve their margins.  Now he shares whom should own margin performance.

While it is a team sport, there does need to be a President of Margin and a GM of margin. This is the difference between vision and building the approach / team / process. The Coach (aka branch or sales manager) puts the players on the field to execute.

Who Owns Margin Performance?

Aligning Pricing Strategy and Margin Execution

Margin opportunities hide in the gap between strategy and execution. For distributors, most leaks happen in the handoffs between internal teams, where everyone owns a piece of the process, but nobody owns the result. This article highlights how the right leadership alignment and governance of cross-functional margin processes is a profit lever you control. I also provide a framework to identify who should own it.

Higher customer expectations, supply chain volatility, industry consolidation, and the growing influence of national chains and private equity-backed distributors have made pricing a strategically important and commercially driven function. Distributors are under pressure to manage pricing with greater precision, speed, and discipline to protect and grow, margins and sustain growth. That requires someone to take ownership and reduce (but not eliminate) sales force influence.

In a recent ElectricalTrends article, Where Margin Is Hiding, I wrote about three processes where distributors can unlock significant margin and cash flow:

• SPAs
• Price realization
• Cost pass-through

Leaks in these three areas persist because they hide between departments; they are buried in manual handoffs and disconnected workflows.

You need a leader who can see the gap, size it, capture it, and drive change.

Executive Sponsorship Shapes Results

Successful margin initiatives require someone who can work across functions as a change agent, navigate ambiguity, and align stakeholders through persuasion and persistence rather than control. All of this, while they are also implementing processes to affect desired changes. The title matters less than their capability to drive change through trust and transparency, but they need authority. Pricing leaders need to help their companies think differently about margin performance, beyond being reactive to never-ending tactical issues.

The right executive sponsor depends on your company’s priorities, culture, and leadership strengths. Below are five options, each with distinct strengths and tradeoffs. The only wrong answer is unclear ownership.

Executive sponsorship sets the strategic direction, but execution lives in the levels below it. Success depends on building agreement, encouraging teamwork, and clearly communicating the “why” and what’s in it for each team involved. Small advisory teams that involve people already doing the work are a well-known success factor in change management. Here’s a look at what an advisory team could look like:

There is a risk of having the right sponsor with the wrong mandate. For example, a CFO who owns margin but is measured only on cost controls will make different decisions than one measured on profitable growth. Before assigning ownership, define what winning looks like, then align leadership accountability to that outcome rather than defaulting to an org chart.

Even then, titles alone rarely determine effectiveness. Individual background and operating styles heavily influence how pricing decisions are made. CFOs with an FP&A background may see things differently than those with an accounting focus. Some sales leaders are great relationship sellers who rarely open a spreadsheet, while others bring an equally effective analytical mindset to profitable growth. There may also be roles for the Legal team on compliance with contractual pricing agreements, and HR on compensation questions tied to margin goals.

This cross-functional reality is why there is rarely a single “correct” owner of pricing. The distributors improving profitability most successfully are not relying on heroic individuals or assuming AI will solve the problem independently. Instead, they are aligning strategy, people, processes, and technology around a shared definition of margin success and clear operational accountability.

Ownership and governance set the foundation for that alignment. Next month, I’ll explore how distributors are layering AI and automation tools on top of pricing and rebate processes, including what’s working, what’s overhyped, and how to sequence the investment for the highest return and lowest execution risk.

Additional Resource

I recently presented a webinar highlighting the three core processes where margin leaks, and steps distributors can take now. You can check out the recording here: Where Margin Hides.

About the Author

Scott Sinning advises wholesale distributors on pricing strategy and margin performance, including diagnostics. He is the founder and principal of MarginMax Partners and was previously Vice President of Pricing Strategy at Graybar. He is a regular contributor to the Channel Marketing Group. Visit www.marginmaxpartners.com to learn more.

Next Step

• Do you have a Margin Management leader?
• How about a Margin Optimization Group that has an executive sponsor supported by a cross-section of individuals from pertinent areas charged with margin improvement?
• If you have a margin goal, which exceeds last year, do you have a defined plan? Is it monitored?
• Honestly ask yourself, “have we improved our margins, appreciably, over the past couple of years?” If you suffer from the Einstein affliction (you know what the quote is regarding “insanity”), perhaps you owe it to your team, and perhaps yourself, to call Scott, invest 30 minutes, and perhaps see if a 3rd party perspective could be of assistance.
  • And if you’re not a distributor, his thought process can still benefit you … perhaps a wise expenditure of time.