What to do in tough times

By Joe Nowlan -- Industrial Distribution, 4/3/2008 9:10:00 AM

When economic times get tough, what’s the best way to run your company? What are the most important fundamentals to practice? DMO talked to some distribution leaders to get their feedback.

Chris Walquist, operations manager, Tool Crib Supply, Bensenville, Ill.

Be prudent in your spending, Walquist says. Put your money where it will be best used, especially in terms of keeping your equipment up to par. He says he’s seen companies fold or move offshore because they failed to do this.

“Only those who invested in themselves and stayed at the higher end of the technology, utilizing the faster machines [to be] more productive, seem to have survived,” Walquist says.

“Work closely with your customers. Try to provide them with as much support as possible and be as flexible as possible in terms of dealing with their requests.

“Being a distributor, you can get caught in the middle, trying to work closely with your vendors and communicating to them your customers’ needs and getting their responses, and keeping quick response times.

“But [as a distributor], being the middle man, it’s important to make sure communication goes up and down the supply channel.”

Phil Gallagher, president, Avnet Electronics Marketing Americas

Gallagher stresses the importance of communication when times become difficult.

“Your communication must be greater than it already is. By communication, I mean [communication] from distributor to supplier, supplier to distributor, distributor to supplier to customer…. Sometimes when it looks like [there might be] bad news, people tend not to talk about it and let it ride out.

“Lean on your strong partners. In good times, it’s easy. But when times get tough, that’s when you test yourself and your partners. In down markets, perhaps cash may get tight. There are ways to work through all that. We’re all in this together. If we can be more flexible with a customer and help them in a situation, or help our supplier, then we should have those conversations.

“You have to be disciplined in running your business. Stay with continuous business fundamentals. If you have good discipline and are communicating, you should be able to manage your business no matter what. If there’s a problem, let’s sit down and talk about it. If we know about it, we can work through it together. We have issues [when] we’re not told.”

Marshall Jones, president, Marco Supply Co.

Jones reflects Gallagher’s advice to communicate, especially with key customers. Jones makes it part of his weekly routine.

“I’ll talk to customers about their backlog and what they’re hearing and seeing. You want to know what’s happening as far ahead as you possibly can. And you need to frame that [information] and compare it with a wide variety of sources. Getting to know as much as possible about what’s happening is a good first step.

“The second thing is to balance cost consciousnesses. If your revenues stabilize or drop, you have to be very diligent at making sure you’re not spending money that you shouldn’t. Prioritize where you do spend your money.

“[But] you don’t want to back off on the money you’re investing in your people—training and developing them, getting them as prepared as they can possibly be.

“So we try to make sure that the costs we do cut are those that are not critical to soliciting business and servicing business, that we can find other spots [to cut] that aren’t as tied in to those areas as directly.”