While our members have been dealing with the hangover effects from COVID-19 and the challenges it has left behind with supply chain disruption and millions of Americans finding it still more profitable to stay home than to find work, ASA continues to expand our programs and services to support members.
2022 ended on a strong note with ASA achieving net distributor membership growth, record turnouts at our leading events, unprecedented Political Action Committee success in the midterm elections and some wins on the codes and standards front. Thanks to all of you, we had a very successful year.
While it’s gratifying to have this type of success, the challenges our industry and members face demand that we do more to become a stronger national trade association, and to gain the backing and full support of the entire industry facing challenges with one unified voice.
Undoubtedly, this will require everyone to think differently about how to remain relevant into the future because “What got us here won’t get us there.” This is a topic that will be addressed during our annual ASA Strategic Planning Retreat in February. More on that in our next issue.
Last month, we conducted a member satisfaction survey to get your views on how we are doing as an association. Based on the strong response, I’m thrilled that so many members are valuing the role of our association in supporting them and in leading the industry to a more successful future.
In this issue, we have highlighted some of our successes in our special year-in-review section. ASA Chairman Bill Condron recaps some of our accomplishments from 2022 as he passes the ASA President baton to First Supply’s Katie Poehling Seymour
ASA’s Steve Edwards talks about the work to expand the value of our
TALENT careers recruitment platform and efforts to build our brand among jobseekers. ASA Director of Government Affairs Steve Rossi looks at the new Congress and reports on what we can expect with the split Congress in 2023.
The results of our second Quarterly Market Survey also can be found in this issue. This time, we zeroed in on human resources-related questions our distributor members wanted answered. Topics in the survey include sales commission best practices, health insurance and much more.
And longtime industry consultant and speaker Randy MacLean takes a look at the five things customers really want.
Enjoy reading another full issue of our ASA Review. We hope that you continue to find the content and association updates valuable to you and your business.
Let me know if there are topics that you want to hear about in upcoming issues by emailing me at madelizzi@asa.net.
Michael Adelizzi, CEOIn its second year, the ASA Great Ideas Roundtable event conducted during the highly successful NETWORK2022 in Chicago has rapidly become a must-attend session as participants tackled some tough questions and provided the association with some great takeaways on topics ranging from innovation to attracting top talent to dealing with a turbulent economy.
Here are a few of the 70 great ideas that members offered during the 90-minute session held at the Fairmont Chicago Millennium Park.
Innovation
How are members grasping the role artificial intelligence is having or going to have on their businesses? From e-commerce to machine learning innovations, artificial intelligence is escalating at a rapid pace, forcing businesses to adapt to serve customers and remain relevant.
Current AI application is gaining in popularity for search applications such as identifying what customers are looking for and buying trends.
Ability to co-promote with vendors.
AI gives the ability to suggestive sell.
Business intelligence pricing elasticity, demand planning (Blue Ridge is a vendor with a pricing module).
Coveo is a vendor with the ability to identify what customers are searching for.
Automation in financing: Billtrust and SparxIQ operate in this space.
Warehouse automation. Distributors are looking more at the pick and pack features.
Lowering the need for labor (long-term). Areas such as the counter and warehouse can be most impacted.
How are members attracting and retaining top talent, especially in these unpredictable economic times? How are they dealing with issues such as “quiet quitting,” wage inflation and its impact on keeping good talent, worker shortages and the stress it puts on existing associates, and measuring the effectiveness of remote workers?
Promote your company values, mission and culture for interested candidates searching for the right fit.
Create your story through video. Strongly consider using a professional firm/consultant to make a video leveraging your employees.
Leverage social media with employee testimonials.
Hire temps with the thought of keeping them full-time. You’ll have to pay a premium, but you’ll also get a great hire.
Use recruiters to both find and weed out the candidates. Promote your process of training/cross-training your teams to help advance their careers. Invest in your teams through greater training that could lead to advancement, even if it means that they will leave your company.
What is the impact that inflation has had on a member company and how is leadership handling situations such as job quitting, unpredictable pricing and nonreliable product availability, rapidly changing manufacturer data updates, passing along surcharges to customers, and the impact on promotional strategies when the supply chain is so difficult to predict?
Inventories and availability are high. Need to watch this closely. Many are looking to lower inventories with availability improving.
Prices are softening. Holding off on stocking up on commodities since prices are declining.
Wages are high and growing. 10-15% wage increases. Different geographically.
Keep a tight watch on all expenses. Combining sales trips to cut costs.
Hold off on some hiring in response to inflation.
Fear of a recession not affecting outlook significantly, but need to keep a close eye on it.
Watch accounts receivable. High interest rates can cost greatly.
For starters, I really enjoyed the chance to be your 2022 ASA president. It was a year filled with meeting ASA members I had never interacted with before, and one where ASA continued to move the needle to the right when it comes to providing maximum value for its members.
Thank-you to my wife, Julie, for her support and encouragement over the last year while I was president, as well as to ASA CEO Mike Adelizzi and his team for the great work they continue to do in making ASA the great national trade association it is today.
In my travels as ASA president in 2022, I talked about the base case for what ASA does in terms of education, advocacy, benchmarking and networking. If you stopped at just the “base case” with those four longstanding pillars, ASA would
remain a wonderful organization that provides relevancy at a time when many other organizations are waning.
But what always impresses me about Mike Adelizzi and his team is they don’t stop at the base case. They take it to the next level, always looking for ways to provide members with even more value.
One great example is the Vitality Growth Assessment survey offered to member companies. This confidential survey, conducted by ASA partner New Edge, is taken by your employees and is designed to improve and accelerate your growth. The survey is based on 20 years of New Edge research with other companies and is a proven game-changer for firms large and small.
The great thing about PROJECT VITALITY is wherever you sit on the company spectrum — ranging from the far left (lifestyle companies) to the far right (innovators/change agents) — there is no wrong answer! Some of the strongest companies and most successful businesspeople I know in our industry are operating well-run lifestyle companies. And there are plenty of great companies in the middle and plenty more to the right.
However, if you are not sure where you fit, or maybe one generation would like to be somewhere where you are not, or you are beginning the process of a strategic planning session, then PROJECT VITALITY could be for you. Get your leadership together and use this tool. It’s a great launching point.
I’m also excited about what ASA’s D.NEXT innovation lab, located in the University of Illinois’ Research Park in Champaign-Urbana, is doing in terms of helping our members tackle an ever-changing business landscape with rapidly evolving technological needs.
Simply put, D.NEXT is a repository where we can ask questions. We know technology moves fast and none of us have the answers on our own. D.NEXT is a safe place where we can ask questions, iterate, test and seek solutions.
We are still in the nascent stages with the lab, but it has quickly developed into a platform where we collectively can lean into these technologies and trends that currently befuddle us and learn more about how to best utilize these solutions to help run our companies more effectively.
Of equally vital importance is the work ASA is doing to lead the charge to help solve the growing labor problem in our industry through its PROJECT TALENT careers recruitment platform.
You can’t continue to grow without great people and ASA is leading that charge for us.
ASA is leading these investments for us, and as an industry it allows each member to figure out how to redeploy those investments the best ways possible within our own companies.
Before I leave you, I want to issue a challenge to all our members.
First, take a moment to think about someone who helped you out as you were coming of age in this business. Somebody who supported you, invested in you, answered your questions and mentored you.
If you are lucky enough to still have them in your life, reach out and thank them.
Let’s face it, we are our own worst marketers in this industry. There have been a lot of missed opportunities to tell people how great our industry is. PROJECT TALENT is changing that conversation to one that tells prospective jobseekers that the PHCP-PVF industry is, indeed, one filled with great people and great career opportunities.
We are getting the word out there and driving those clicks, views and likes on websites and social media — all the communication platforms that matter these days.
ASA is helping its member companies tackle this very prominent problem through the PROJECT TALENT platform.
And the second challenge is to pay it forward. It is incumbent upon us to help people move up and on in their careers. Take the time to mentor, support and invest in some of the young people in our industry. They are the next generation of leaders for this great industry, and it is up to all of us to take the time to support them as they move on and up. It’s a virtuous cycle and it is one of the things that makes this business such a great one.
The time is now to invest in that next generation. Your businesses and our industry depend on it.
Here’s to a great 2023 and thank you for a great year, Bill
“Take the time to mentor, support and invest in some of the young people in our industry. They are the next generation of leaders for this great industry.”
After $16.7 billion was spent on campaign activity during the 2022 election cycle and seeing an epic battle between Republicans and Democrats played out across the country for Senate seats and newly redrawn House districts, the real work of the 118th Congress began at the start of January.
However, the national campaigns give some clues as to the direction the country will take from a policy standpoint, and it is important to understand the election cycle itself and how both political parties have emerged from a bruising political contest.
Going into the 2022 cycle and even into the last few weeks of the campaign, it wasn’t the Democrats that were expected to do well. The President’s poor approval ratings, epic inflation, an unstable labor market and historic precedent all pointed to success for Republicans. Still, there were some issues that swung independent voters towards the Democrats and away from Republicans that essentially changed historic patterns.
In July, the Dobbs decision began to energize the Democratic base, that up until that point, was experiencing low enthusiasm for their party’s candidates. While polling initially
showed an uptick in Democratic intensity, by September it fell to mid-pack on issues voters cared about. This was clearly an issue that too many ignored.
Democrats in swing Senate seats and other challenging races across the country went all-in on the abortion issue (particularly with suburban women) and it worked. Second, considering the Jan. 6 hearings and the raid on former President Trump’s home in August, Democrats made a pitch to independents that the democracy itself was at stake. They were able to convince many independent voters that if they did not keep the reins of power, democracy would cease to exist.
To reinforce this argument, they pointed to several statewide GOP candidates that publicly stated the 2020 election was stolen. This also worked. What is confounding to many political pundits is these issues overcame the Democrats’ huge deficit on economic issues that cut across socioeconomic lines.
In the Senate, there are some that will point to candidate quality as to why Republicans underperformed. In Pennsylvania, Dr. Mehmet Oz took some initial political hits for having recently moved from New Jersey, 30 years of remedies he advocated for on television, and his terminology for a vegetable (crudité)
platter — all caused him to stumble out of the gate. Even with the endorsement of Donald Trump in the primary, Oz barely won and started off with a money deficit and an unclear message. He later fixed many of these issues but was never able to get back on track. Lt. Gov. John Fetterman was a known quantity to Pennsylvanians and even after he suffered a stroke that took him off the campaign trail for a time, 300,000 voters (especially independents) trusted him more than Oz. Oz also had the challenge of running with an unpopular GOP nominee for governor in Doug Mastriano. Mastriano was defeated by Democrat Josh Shapiro by 15 points — a result that did not help voter turnout for Republicans.
Georgia was another Senate race where the top of the ticket mattered. Sen. Raphael Warnock (D) was seeking reelection only two years after winning a special election in 2020. He faced the formidable Georgia football legend Herschel Walker, who was almost invulnerable to allegations of mental health challenges, paying for women’s abortions, domestic violence and other issues. While his star power partially helped him to overcome this, he was also running at the top of the ticket with popular Republican Gov. Brian Kemp. Gov. Kemp was in a rematch with formidable Democrat Stacy Abrams. Before the 2020 election, Gov. Kemp was one of the most popular governors in the country.
After that election, Kemp took a political hit from his base when former President Trump highlighted his resistance to overturn votes in Georgia. Due to this, Kemp was able to appeal to independents and moderate Democrats to easily dispatch Abrams by 7 points. This may have provided some of the boost that Walker needed to keep Warnock under 50% and force a runoff. In the runoff election, Gov. Kemp’s voter turnout operation was handed over to Walker, but in the end, it wasn’t enough. Warnock had the power of incumbency, is a prolific fundraiser and had the benefit of several Democrats coming to campaign for him —including former President Obama — and with that, able to seal a 2-point victory.
In the House, Republicans were able to increase their majority, with 222 seats to 213 for Democrats. While this wasn’t the massive accumulation of seats many political watchers expected, they were able to pull off some key victories, including the defeat of the head of the Democratic campaign committee (DCCC),Sean Patrick Maloney in NY-17. The GOP picked up four seats in New York overall. Republicans in the House were also able to do well in other blue states and suburban areas. Republican California reps. Mike Garcia, David Valadao, Michelle Steel and Young Kim (as well as reps.-elect Kevin Kiley and John Duarte) were able to emerge victorious in a state that has been hostile to Republicans for decades.There was a net gain of 4 seats in Florida, with Republicans riding the impressive red wave in the Sunshine State, led by the 17-point victory of Sen. Marco Rubio and 19-point win of Gov. Ron DeSantis.
The real surprise came with the last House race called — Rep. Lauren Boebert’s seat in Colorado’s 3rd District. Most never would have thought that Rep. Boebert would have any real
challenge to winning her new district in western Colorado, but Democratic opponent Adam Frisch exceeded expectations. The race was not called until mid-December (after a recount), but Boebert emerged victorious with 50.06% of the vote.
As this article goes to print, the contrast between the House and the Senate could not be starker. On the Senate side, Senate Minority Leader Mitch McConnell R-KY) is appearing with President Biden in Kentucky to tout the benefits of last year’s infrastructure bill. In the House, multiple ballots have taken place to elect a new Speaker with no success. In that chamber, it has been shown, both on the Democratic and Republican sides, that a coalition of like-minded individuals can either shift policy or derail parliamentary procedure. Serving as a caucus leader has its share of challenges. At this time, given the roughly 20 Republicans that have prevented Kevin McCarthy an easy path to the Speakership, it will be difficult to keep legislative and parliamentary procedure moving forward, especially when it comes to controversial issues.
Congress and the Biden administration have critical issues to address in 2023. Legislation concerning a new farm bill, FAA reauthorization, immigration, tax extenders and the government’s debt limit will all be addressed this year. House Republicans had already filed bills to address the reduction of funding for the IRS, barring the federal funding of abortions, as well as expanded action on immigration and border security — all to be addressed in the first few weeks. With the Speaker’s vote still up in the air and no members of the House yet to be sworn in, those policy decisions will be delayed.
ASA will continue to monitor and advocate on behalf of the industry on these federal issues, as well as the multitude of state legislative and regulatory actions throughout the year. If you have any questions regarding legislative or regulatory issues, please contact ASA Director of Government Affairs Steve Rossi at srossi@asa.net
“We have had to be nimble and give some spot raises at times in order to keep vital talent,” one respondent wrote. “Our pay ranges also have been creeping upward in order to keep up with market trends.”
“We added a small cost-of-living adjustment to our normal once-a-year wages,” another distributor moted. “We have also, in situational instances, made one-off adjustments to wages in certain competitive markets.”
Others pivoted in areas such as operational costs and technology.
“Focusing on innovation, technology and quality processes to help lower operating costs,” one respondent stated.
The latest American Supply Association Quarterly Market Survey shows member distributors continue to tackle modernday business realities, both the good and the challenging.
The survey, produced by ASA’s Business Intelligence Unit, asked association distributor members what questions and topics they would like asked in the survey. Both multiple-choice and open-ended questions were asked, allowing respondents to further elaborate on their responses. This time, more openended questions were requested to be asked of members.
Full results of the survey were sent to ASA distributor members and can be found in the MyASA members-only portal at www.asa.net/myasa (log-in credentials required) or by emailing ASA Manager of Data and Market Intelligence Bri Baresel at bbaresel@asa.net
The data below is but a snippet of the overall survey contents and members are strongly encouraged to access the full report.
Questions in the survey ranged from inflationary adjustments to post-pandemic business approach to more HR-centric topics such as the continued challenging labor market, health care for employees, employee wage discussion, commissions and employee work-life balance.
ASA-member distributors were asked how they have dealt with inflation in the last year. Most responses quickly turned to employee wage levels.
“Wage increases, market adjustments, increased pricing passthrough to customers, combined with a reduced margin level to remain competitive,” another distributor summarized. “2022 has been a harder year in terms of margins and controlling costs.”
Distributors also were asked what the biggest change has been since the pandemic slowed. Almost all pointed to increased interactions with customers.
“More in-person events and activities,” one distributor said.
“The return of vendors and customers to our buildings,” another noted.
One distributor noted a nice change in showroom operations. “More people walking into showrooms to purchase high-dollar remodel products,” that person wrote.
With this question, talk also turned to the topsy-turvy labor market. “Bcause unemployment numbers are so low, it’s hard to find good, quality workers for the positions we do have open,” one distributor said.
“More candidates applying for open positions, however, none of them want to come to work every day,” one respondent bluntly noted.
“Hiring competent employees that are willing to work 40 hours a week,” another distributor added.
One respondent said the pandemic has made his staff more aware of potential future business disruptions. “It seems
like we are getting back to something closer to a semblance of normal,” the distributor stated. “It seems though that employees know to expect the unexpected and that the other shoe could drop at any moment. There is an air of uncertainty that was not there before the pandemic.”
Staying with the labor topic, multiple questions were asked specifically related to the continued challenge that is hiring/ retaining employees.
When asked what their most effective hiring tool is, 67% of respondents to the survey said word of mouth, while 25% mentioned online and 8% said the use of recruiters.
“We have an internal employee referral program and bonus that tends to bring great candidates forward,” one distributor wrote.
“We offer a bounty of $3,000 to the referring employee,” another distributor revealed.
One distributor noted it uses a combination of temp agencies and referrals, but “with the tight labor market, it’s been more referrals.” Another distributor explained it has employed a fulltime talent acquisition manager for the last six years.
Chatter was strong when distributors were asked if their 2022 employee turnover was higher or lower than 2021. The good news is more than 2/3 of respondents said that number remained flat last year, while nearly 21% said their quit rate went up.
“We had more competition this year in warehouse positions and more turnover there because of competition,” one distributor wrote.
“Our turnover rate seems to hover at about 20%, which is not great,” another distributor noted. “However, we have not seen the effects of the great resignation that other companies have experienced.”
Nearly three-quarters of respondents to the survey said they track the reasons employees leave their shops, while the average time it takes for a distributor to fill open positions currently ranges anywhere from two weeks to six months, based on survey results.
“It’s too long,” one distributor lamented. “Ninety days is a good average right now, and that is way too long.”
Distributors also were asked what initiatives and incentives they have in place to retain good employees — another question that generated plenty of responses.
“New hires are getting paid holidays before their 90-day probation is over,” one distributor explained. “Regular bonuses, more liberal scheduling, covering sick days above PTO days, providing lunches on a regular basis, cellphone allowance, more correcting in the best, positive way and being more thankful to the employees.”
A host of human-resource-related questions were asked of distributor members, including how companies are handling the inflationary environment related to sales commissions.
“We have fallen short in this area,” one distributor admitted. “We did not get ahead of it, and it is costing us. We are rolling out a revised commission plan (this month).”
“No change. We pay off by margin,” another distributor responded.
“We haven’t adjusted commissions, but more base income and a bigger car allowance,” another distributor wrote.
“Percentage still based on gross profit and net profit for managers,” was another distributor response.
Along those lines, more than 70% of respondents said they do not cap wages for specific positions.
“Inflation doesn’t cap, why should employee wages?” one respondent asked.
One interesting question posed by a distributor member was if companies pay commissions on collected sales and how are they doing it? Reponses ranged from commissions not being paid if a sale goes unpaid beyond 90 days to another distributor noting the commission goes out the window at 150 days in AP.
“All commissions are based on shipped and paid sales,” one distributor said.
On the topic of health care for employees, 28% is the average respondents to the survey are asking their employees to contribute to their health-care plan.
Additionally, distributors were asked what the average PTO/ vacation/sick time accruals they have in place. Responses were again all over the board on this one and warrant further examination by readers.
And finally, distributors were asked how they are best handling work/life balance with employees.
“Just like we always have, there is nothing new about recognizing and valuing the importance of work-life balance,” one distributor wrote.
“Life balance is a core value of our company,” another distributor noted. “We have specific business hours and we stick to those hours. Life balance can be more challenging in corporate or sales roles, but we try our best to practice what we preach, even in these roles.”
If you have a question(s) you would like posed in the next quarterly market survey set to launch in Q2 2023, email Bri Baresel at bbaresel@asa.net
One company saw its employee workforce rise from the 400s to the mid-700s after an acquisition, and thus the need and challenge to meld the two companies into one plan.
Another company also has been active on the acquisitions front and has seen premium increases between 5 and 15% over the last four years.
A majority of the panel discussion veered toward various wellness and ancillary programs companies offer — with wellness incentives being top of list.
One panelist noted their company offers a la carte add-on options such as prescription and mental wellness programs that have proven to be good recruiting tools.
One new wrinkle in the American Supply Association’s NETWORK2022 presentation this past November was the addition of five member-led panel discussions.
The results were overwhelmingly positive on topics such as how distributors are navigating emerging trends to avoid disruption, navigating the growing cost of healthcare, marketing trends to attract top talent, what makes a winning culture in a postpandemic world, how distributors are navigating supply chain disruption and handling allocations with their customer base and getting the most out of your cloud ERP.
The health-care discussion was moderated by Weinstein Supply, a division of Hajoca’s Deb Gorra and featured a panel comprised of Michael Hobbs (Carr Co.), Joe Pro (Penn Machine), Bill Zoeller (Zoeller Pump), Nicole Boles (Cregger Co.), Melissa Lunak (Dakota Supply) and Bryce Moore (Hirsch Pipe and Supply), as well as Danielle Capilla of Alera Group.
Each panelist started off by giving a brief rundown of their current company insurance setup. Some highlights from those presentations:
One panelist’s company received two sizable rebates recently that were plugged into a company health and wellness program, and also were used to not deduct any healthcare costs for employees in the month of December, a nice holiday surprise, the panelist noted.
Another panelist explained their company, due to continued growth, was transitioning from being 100% paid-byemployer for almost 40 years to instituting an employee contribution, but with an eye on making sure to keep that contribution fair across all job functions. The panelist revealed the company’s annual healthcare spend, which elicited an audible gasp from the audience in Chicago.
Several panelists mentioned the use of biometric screenings for employees that have various incentives tied to them. “It’s been a great opportunity to look at everything and all the health-conscious supplemental opportunities we have with our employees,” one panelist said. “We’re thrilled to be able to do it.”
Another panelist explained a good biometric screening results in the participating employee receiving extra compensation per pay period.
One company did a wellness challenge that encompassed walking, running, mental health and yoga with prizes awarded at the end, another did wellness campaigns that included eating vegetables, sleeping eight hours and doing pushups, while another company put forth a 3-million walking steps challenge that was met by two teams of four.
On the topic of prescription medication, one panelist noted at one point 40% of total costs on the insurance side came via prescriptions, a number that through some hard work was cut down to 17% last year.
Plenty of prescription cost remedies bandied about by panelists included the use of offshore prescription services (that saved one company $300,000 a year), focusing on generic drugs and the use of online education tools that steer employees to specific pharmacies that offer rebates and even zero-dollar cost for blood pressure medication, for example.
“We try to educate people,” one panelist said. “It could be the difference between picking up a prescription at Walgreens or CVS where sometimes you might get a rebate or refund.”
“It’s been an opportunity to talk about prescriptions and what those costs are,” another panelist added.
The American Supply Association continues to be an indispensable resource for PHCP-PVF member companies and their employees.
In 2022, the industry’s only national trade association helped its members further prosper in their businesses through its efforts on the education, business intelligence, advocacy and networking fronts.
ASA once again enjoyed net distributor growth, while also adding 39 new companies to its Vendor Member Division, which includes manufacturers, independent manufacturers representatives and service providers.
ASA distributor members now account for more than $57 billion in sales and operate more than 4,300 branches nationwide.
While ASA continues to grow its membership base, the association is not slowing down when it comes to offering its members even more tools to use in their businesses that will help now and well into the future.
ASA Chief Economist Dr. Chris Kuehl continued to keep members abreast of all the latest economic topics and trends of keen interest throughout the PHCP-PVF supply chain via his live monthly webinars and weekly podcasts — both free member benefits.
Dr. Kuehl’s live webinars provide attendees with an overall update on economic conditions, while his “Keeping it Real with Dr. Kuehl” podcast, published three times a month, zeroes in on a specific economic topic.
Dr. Kuehl also delivered his live industry forecast at NETWORK2022 in Chicago this past November, and also spoke to attendees of the ASA Northeast Summit last June.
NETWORKO2022, ASA’s premier annual event, drew a record crowd of 850 attendees to the Fairmont Chicago Millennium Park for three days of education, best practices sharing and networking. A total of 89 ASA member distributor companies were in Chicago.
Monthly Economic Webinars
Viewed More than 1,600 Times
Weekly Podcasts Listened To More than 5.000 Times
ASA’s annual Operating Performance Report, regarded as the gold standard of benchmarking reports in the PHCPPVF industry and now in its fourth decade of publication, once again saw strong participation in 2022.
The OPR gives ASA-member distributors more than 70 financial data points to benchmark their companies against the industry in general, specific sales volume, specific product categories and specific geographic regions. A company report card is provided to participating distributors, and in some cases, a buying group-specific report is available.
11 36 98
Highlights of NETWORK2022 included numerous memberhosted best practices panels on topics such as healthcare and ERP system implementation, the popular Great Ideas best practices roundtable session, a presentation on ASA’s role in helping recruit new talent into member companies during the ASA annual member lunch, as well as the wholesaledistributor-vendor conference appointments — a staple of the industry’s biggest event of the year.
Mark Your Calendar NETWORK2023 takes place Nov. 8-10 at the Signia by Hilton Orlando Bonnet Creek. Look for registration details soon at www.asa.net
A recent survey shows 98% of ASA members value their membership in the national trade association.2023 ASA President Katie Poehling Seymour (First Supply) is shown during her president-elect address at NETWORK.
ASA’s Emerging Leaders group set a new attendance record with its EMERGE2022 presentation in New Orleans last May. A number of well-received additions to the EMERGE lineup in New Orleans included member-led panel discussions, as well as a state of the PHCP-PVF industry panel. Staples such as the best practices roundtables and night out closing event provided key networking opportunities for attendees.
EMERGE2023 heads to Savannah, Georgia May 10-12 at the Hyatt Regency. Registration details are available at www.asa.net .
10,694
101 256
Course enrollments in 2022.
Engaged distributors in ASA University in 2022.
Training tracks sold in 2022.
ASA University rolled out a pair of new programs, both aimed at helping members enhance their employee training and education efforts.
ASA’s Women in Industry Division continues to be the fastest growing special interest group in ASA, as evidenced by a record-setting 225 attendees at ELEVATE2022 in Louisville, Kentucky.
WII attendees were treated to a packed schedule that featured education topics such as sales, leadership and personal development and growth. An evening outing to the Kentucky Derby Museum provided great a productive networking setting.
ELEVATE2023 will be held April 11-13 in Charleston, South Carolina. Register at www.asa.net
The “How to Develop an Effective Training Program” manual is a literal how-to guide on how to develop a successful training program — all chapters were written by ASA members.
ASA University also debuted its live trainer’s forum in Chicago last summer, bringing together trainers from ASA member companies for a day of education and best practices sharing. Details on the 2023 trainer’s forum will be released soon.
ASA University continues to provide strong value
Are
ASA continues to grow its social media presence through its LinkedIn, Instagram, Facebook and Twitter channels.
To close out 2022, ASA had nearly 3,600 followers to its LinkedIn page @American Supply Association (ASA), while the association’s Instagram offering continues to grow in scope.
ASA’s PROJECT TALENT helps members in their hiring journey
PROJECT TALENT Highlights:
More than 100,000 social media ad clicks in 2 years. 23,000 unique users visited the Supply Industry Careers website in 2022.
3,599
Number of followers on ASA LinkedIn page.
Q2 ASA REVIEW ASA Winter Leadership Meeting Volunteers converge in Arizona to discuss key association initiatives. 22 Why employee training is crucial for long-term success How to attract top talent How AI can help sales reps manage more accounts Q3 ASA REVIEW Do your pay your team members competitive wages and benefits? 22 State of the mechanical and industrial PVF industry How intentional working helps achieve career goals Building roadmap for distributor digital transformation Q4 ASA REVIEW 2022 Fred V. Keenan Lifetime Achievement Award ASA honors Mid-City Supply’s Jeff New and Hajoca’s Gary Jones 22 Also In This Issue: State the Industry Survey Results The Importance of Customer Segmentation Enhancing Connections With Contractors
4 quarterly ASA Review publications provide thought-provoking content to more than 8,000 readers in print and online
ASA Political Action Committee backs candidates who support the PHCP-PVF industry
23-2 59 41
ASA’s PAC enjoyed a 41% increase in total dollars raised compared to 2021 and closed out 2022 with its best reporting period in several years in the fourth quarter.
A total of 59 additional ASA members took part in the PAC in 2022.
With the unemployment rate at its lowest level in decades, employers across the nation continue to struggle staffing their companies with high-quality talent.
This situation isn’t limited to specific industries or regions. It’s rare to drive through any city across the country without seeing “Now Hiring” signs everywhere you look. Companies that aren’t trying to fill open positions are the exception.
While tried-and-true recruiting tactics such as job postings, attending job fairs, and employee referral programs are still effective, competition for talent is fierce and is requiring companies to take measures never taken before.
Companies are further integrating their recruiting and marketing efforts to reach more qualified candidates while ramping up their messaging about the
benefits of their culture and values. As a result, employer branding is critical to recruiting and has become a priority with countless companies and a growing capability and emphasis for marketing and recruiting firms.
In traditional corporate branding, an organization’s brand is the essence of the value it provides customers. When a current or potential customer is asked to describe a specific business, the answer is that company’s brand, good or bad. This is why many businesses have invested in brand management because it has become so important in business, particularly in an age where customers can share their opinions so easily and broadly.
Employer branding is the same concept, but the objective is to convey and influence a company’s reputation as an employer and its value to current and potential employees. Corporate branding is designed to ultimately sell more goods and services to customers. The goal of employer branding is to position a company as a great place to work with existing and prospective employees. An employer brand can help attract the type of candidates a company desires and ideally positions it ahead of the competition.
As mentioned earlier, the competition for talent is intense and fueled by an extremely tight labor market. Companies are not only vying for talent with their direct competition,
but with every other business and industry. Firms that are winning the war for talent are using employer branding as a strategic advantage.
Companies that invest in employer branding are more likely to attract the candidates who not only have the right skills and experience, but fit best with a company’s culture and values.
Employer branding also gives businesses the ability to compete for jobseekers on more than just compensation. It’s often discussed that successful distributors don’t compete on price but on the value of relationships and service. The same holds true with employer branding and finding talent who consider a company’s promise and employee experience with as equal weight as pay.
Employer branding not only helps with recruiting but retention also. By using employer branding to show what it’s like to work for a company and examples of successful employees, it sets an expectation for incoming employees and eliminates potential surprises or the perception of bait and switch.
Recruiting experts believe employee turnover can be cut by almost two-thirds with effective employer branding.
Aside from these possible benefits, there’s also the potential downside of not investing in employer branding and simply continuing with recruiting practices that may have been effective in previous years or decades. Like the old adage about employee training that asks: “What happens if I train my employees and they leave?” compared to “What happens if I don’t train my employees and they stay?” The current labor landscape is simply too competitive to not include employer branding as a recruiting strategy.
Source: The Brookings Institute
ASA’s PROJECT TALENT, one of the association’s key strategic initiatives, was born to help brand the PHCP and PVF distribution and manufacturing industries as attractive and viable career options, and assist members with their local recruiting efforts.
The combination of these efforts is much like the analogy of the Goodyear blimp and local tire sales. The Goodyear blimp has flown over sporting and other events for nearly 100 years and is a highly recognizable corporate icon. When most people think of blimps, Goodyear comes to mind. However, it’s the combination of that recognition with the sales, promotions and service efforts of local Goodyear tire dealers that result in the purchase of their products.
PROJECT TALENT is very similar in approach. ASA has invested in increasing and enhancing the visibility of the industry while building and providing tools and resources for members regardless of their recruiting capabilities or investment.
Through social media, email marketing and the creation and promotion of the supplyindustrycareers.com website, ASA continues to show examples of the benefits of the industry while drawing interested jobseekers to members.
Additionally, ASA has created an online Recruiter Toolbox for members that includes tools and resources to augment members’ local recruiting efforts.
The proper attention and focus on a company’s employer brand can help a business rise above the rest in its recruiting efforts. This, combined with ASA’s industry branding work and the tools and resources available to ASA members, give PHCP and PVF distributors and manufacturers a fighting chance in the ongoing battle for talent.
As of mid-2022, the labor force is roughly 3 to 3.5 million workers smaller than its pre-pandemic projection.
Now that the worst of the supply chain struggle is behind the PHCP-PVF industry, ASA member distributors and vendors are focusing on the future and applying what they learned over the past year or so.
A group of distributors and vendors sat down during ASA’s NETWORK2022 in Chicago for a panel discussion on how distributors are navigating supply chain disruption with their customers and agreed that while ugly terms such as allocation are now less commonplace, a hint of caution still exists as the calendar has turned to 2023.
Moderator Scott Robertson, president of Robertson Heating Supply and a former ASA president, asked the panel what potential supply chain issues are lurking in 2023.
“Trucking companies are the biggest concern,” Viega’s Dalyn Cantrell said. “Getting them to show up when they say they are going to show up and getting them to do what they say they are going to do.”
“The freight industry is top of mind,” Charlotte Pipe’s Billy Zimmerman agreed.
Zimmerman cited statistics where 30% of all freight is transported by rail and the average rail slowdown at the time of the conference was 3.5 miles per hour.
“Manufacturers concerns become our concerns,” Gateway Supply Chairman Sam Williams Jr. said. “Their concerns are real.”
The majority of the panel discussion in Chicago talked about lessons learned from the supply chain crisis and how those can be implemented in the future.
A hard reality on the distributor front was having to say “no” to customers. “One thing we all learned is customers were going everywhere for product,” Coburn Supply President and ASA President-Elect Patrick Maloney explained. “We were getting orders from customers we had never dealt with before. We weren’t used to telling people no. It was definitely a struggle, but we looked at order history and tried to be as fair as possible.”
Williams noted Gateway dealt the challenge of new customers placing online orders and taxing already limited inventories.
“In some cases we had friends that we had never had before who were searching for product,” he said. “Ultimately they understood, but they didn’t like it. We told customers this is
what you bought from us and this is what you can get. Use it all now or over a period of time.”
Irr Supply Centers President Pat Duffy said business analytics software helped the New York-based distributor’s branch managers with product allocations as did a letter from him to customers explaining the situation.
“We had to support those who supported us,” he said. “It worked out in the best interests of everybody. After getting the letter and reading it, our customers felt they had a stronger relationship with us and supported us.”
“We were all in the same reality. You try to communicate with them the best you can,” Maloney said.
Viega’s Cantrell and Charlotte Pipe’s Zimmerman said they’ll be prepared if/when conditions go off the rails again.
“We will have to go through it again in the future,” Zimmerman said, “and we’ll communicate even further with our customers.”
“We have a process in place and will be prepared when it happens,” Cantrell added. “It can easily happen again, and it can happen quickly.”
If you ask your sales reps what customers want, you’ll get a lengthy inventory of needs, whims and wishes, as expressed by customers over the years.
More than a decade working in LIPA (line-item profit analytics) with hundreds of the world’s best distributors has answered this question much more directly.
In reality, there’s only five fundamental items that truly influence customer purchasing decisions. Distributors with mastery of these items always lead the market. Moreover, you’ll need either parity or superiority in all five to seize and hold a leadership position.
If you fail in any of them, competitors that outperform your deficiencies will pass you by.
There are no exceptions — you either have them, or you lose.
Customers are affected and influenced almost exclusively by:
Availability
On-time delivery
No product failures
Smooth (and short) interactions
Acceptable price
Availability
The top element that matters is the availability of the product or service needed by the customer.
Efficiency metrics surrounding fill rates on critical products is foundational to customer experience and company productivity. Fill rates exceeding 99% are certainly possible for your most profitable products and most profitable customers — when you can identify your most profitable products, and know who your most profitable customers are.
You need a dedicated cost and profit system to identify profitable products, customers or anything else. Margin will not help you find those that contribute most to your bottom line because profitability is all about cost-to-serve and has almost nothing at all to do with margin. (Heresy, I know, but this is the most important finding from a decade in the numbers of the market leaders.)
Once identified, you can increase stock levels on the mostprofitable products and prioritize your most-profitable customers. This will reduce stock-outs and raise fill rates where it matters most.
Customers want what they want, when they want it. The “when” part is best achieved by formally offering a range of delivery time options. (“You can have it tomorrow, in two days or sometime next week.”)
Each will have its own associated delivery charge ($25, $10, FREE), giving the customer complete control over the balance of time vs. cost. It also facilitates the vital addition of delivery revenue to your OpCash (operating cash) and cash-flow.
More importantly, formalizing options puts the balance of speed vs. cost for every order into the hands of the customer, while eliminating the costs and inefficiencies of exception processing driven by provision of informal options.
Product failures (and delivery failures) are an irritant to your customer relationships. As they accumulate, your company will be tagged as unreliable and customer loyalty will plummet. It’s also important to stay on top of quality issues, be they productrelated or service failures in your logistics chain.
Failures happen — what counts is how quickly and conveniently (for the customer) you correct them. Have a concierge customer service group for your Platinum accounts and be proactive with the vendors as they’re upstream from product issues and may not have any notice of widespread problems until they hear from you.
Your customers are properly focused on what they’re doing for their own customers. Your sales reps are an unwelcome distraction in their world. Make customers’ interactions with you as effective and as minimal as possible — that’s how they like it.
Customer loyalty doesn’t come from the relationship with the sales rep, it’s from the company’s execution on the things that matter. Using analytics to manage operational efficiency improves performance and reduces errors. Both drive customer loyalty and also reduce costs.
If the customer connection actually does hinge on the rep’s relationship, then the customer isn’t yours, it belongs to the sales rep. If the rep’s relationship is holding the customer relationship together, then your company performance isn’t. You need to have a hard look at the customer experience because your company may have an inability to deliver on the things that matter. You’re vulnerable and competitors will take your accounts.
Customers don’t want to feel like they’re being exploited. That is, feel like they’re paying an unfair price. Outside this caveat, they’ll pay a price premium if they evaluate the experience with you to be efficient and trouble-free.
If you’re executing competently, price is seldom the ultimate determinant, but where price does have sway, having a low-expense rate on the customer relationship gives you options. (This is a critical feature of LIPA – knowing the actual expenses for a customer.)
For instance, you could help a profitable account where the margin is 18.3% (already below your company average) win a specific bid with an order you’d price at 15%, knowing the customer’s expense rate is 10.4%. You’d take a reduced profit (but still a profit) because you’d add profitable incremental cash-flow (OpCash) to your sales, and would be seen by a key customer as a great partner, increasing loyalty.
Total customer experience determines customer loyalty and market share. You get advantage in your market by executing above your peers on these five items. Superiority on one or more will increase share and profits — as long as you’re not underperforming on others.
If you’re feeling “margin pressures,” “evaporating customer loyalty” or an inability to maintain historic profit levels, you’re certainly behind your peers on one or more of these elements.
Companies get down all kinds of rabbit holes, trying to be everything to everyone. The reality is that customers only want five things, and relentless focus on this limited list separates the best from the rest. Use this list to cull unproductive initiatives while taking a new look at the items you’re almost certainly missing. A reviewed focus will magnify the gains you’ll get from your limited time and resources.
Gather your team and get to work on these five items and you’ll begin your advance to new records in cash-flow, profits and market share.
Randy MacLean is the founder of WayPoint Analytics, the inventor of LIPA, and best-selling author of a series of profit practices books.For more than a decade he’s been analyzing company results, thinking about, writing about and advising on profit issues in distribution and manufacturing. WayPoint software is used by hundreds of companies to control their profits, and their destinies.Visit www.waypointanalytics.net
This article is adapted from a section in Profit-Driven Analysis & Practices: The CEO’s Guide to Record Profits by Randy MacLean. The book explains the field of LIPA (line-item profit analytics), and how you can use its unique metrics and strategies to outperform everyone else in cash-flow, profits and market share. Get it on Amazon at https://amzn.to/3tjr2VM.
There are few sectors of the economy where forecasters look more foolish than in oil and gas.
Nearly every prediction ends up being revised over and over again. The reality is that oil is a classic “inelastic good” and that means that consumption reacts very little to price — at least in the short run.
People need what they need and don’t necessarily reduce their commute because the price goes up —just as they don’t lengthen it when prices drop. The U.S. is slated to consume some 20 million barrels a day in 2023. As recently as five years ago it was 24 million bpd. This reduction has been attributed to the expansion of remote work and the subsequent reduction in the daily commute.
The U.S. will be producing a record level of oil in 2023 — between 13 and 14 million bpd. There will likely be some slowdown in rig count early in the year, but with any economic rebound that count will go up. The EEA is predicting per-barrel oil prices at around $90, gas at the pump at around $3.60 and diesel at around $4.10. Gains in revenue will likely flow through to the bottom line as companies focus on containing costs and using technology to improve exploration and production efficiencies.
Given the geopolitical climate and the uncertainty around the depth of the recession there will still be big spikes in the per-barrel price and corresponding drops — volatility will be present in 2023 as it has been for the last few years.
Saudi Arabia aims to build 54gw of renewable capacity by 2032, the UAE is eyeing 100gw of renewable-energy capacity by 2030, at home and abroad, up from a cumulative investment in 15gw-worth in 2021. That would make Masdar, a state-controlled clean-energy outfit, the world’s second-biggest developer of clean energy. It recently bought a British firm developing energy storage technology.
The Gulf’s biggest green bets concern hydrogen. If it is made using renewables as opposed to natural gas, hydrogen is a clean fuel. There is a sense that renewables and fossil fuels will be sharing the energy stage for quite some time. The EIA asserts the world will still be 70% dependent on fossil fuel by the year 2050. The sanctions on Russia have had a minimal impact on oil production and they still have the sixthlargest reserves in the world. The EU is trying to cap prices for Russian oil but this has been met with resistance within Europe as many nations are still highly dependent on Russian output (especially diesel and gas). The tug-of-war between
fossil fuel and alternative fuels will dominate energy sector thinking for the foreseeable future. There are opportunities for ASA members in either field — it is basically a matter of tracking the investment flows.
Rig count is one of several measures used to predict future oil and gas output. It tends to be a lagging indicator in that demand stimulates interest in investing in new rigs. Right now, the pace of rig development has been stalled by the reminder that rig count is a lagging indicator and therefore says more about last year than about the coming year.
There is a possibility that crude oil prices decrease over the next four years. This is based on an assumption that higher interest rates will trigger a recession and reduced consumption. In the past, this drop in consumption has been matched with reduced output by the major producers and that would affect the offshore oil rig and platform construction industry.
At the same time, there is more interest in developing energy security and that encourages more domestic expansion as a means to be less vulnerable to situations like those that affected this past year. These trends tend to counter each other but for the purposes of planning, the drive to develop energy security has more staying power than concern regarding recession. Thus far, there has not been a noticeable drop in demand and many analysts are now suggesting that a downturn in 2023 would likely be mild and not deep enough to impact fuel consumption.
Regulations, environmental events and various exogenous factors can drastically alter the industry’s performance. Over the next five years it is estimated that industry revenue will decrease at an annualized rate of 2.1% to $2.4 billion. This is not a consensus view by any stretch as some analysts are saying an increase of 50 in 2023 and some say a decrease of 50.
The reality is that oil and gas producers are energy companies and as such they wish to make money from all varieties of power production. The west has been trying to cut Russia’s oil-export revenues without causing global prices to spike since February. Russia exports as much oil as before its invasion of Ukraine but is being discounted. Financial investors seem to have had a greater hand than usual in depressing recent prices, which could portend a sudden upwards correction when the fundamentals of supply and demand kick back in.
Events that might have pushed prices in the past (partial shutdown of the Keystone pipeline on Dec. 9) seem to have barely registered. Right now, the energy companies and countries dependent on energy are attempting to diversify as they see opportunity in developing renewables.
As mentioned above, fuel is an inelastic good and that essentially means that consumption doesn’t react to price very quickly. Fuel is a necessary purchase if one wants transportation and therefore reacts slowly to changes.
In the long run, people may decide to buy a more fuel-efficient vehicle or move closer to work but this will not be a quick adjustment. Prices react primarily to production decisions and these are made based on future expectations. If there is a sense that recession is coming, the assumption is that less oil and gas will be consumed. If there is an assumption that growth will accelerate, there will be more demand.
U.S. shale production is expected to peak in 2024 and that is a similar position to that facing OPEC+. The nations with the largest reserves are Venezuela, Saudi Arabia, Iran, Canada and Iraq. The U.S. is not even in the top 10 at this point, but has the largest strategic petroleum reserve (378 million barrels). The reserves in Venezuela are at 145 billion. The U.S. is in a position to develop more of a reserve with the expansion of fracking and offshore expansion if it chooses to.
Given that new supply takes between 12 and 24 months to come to market, the oil producers will try to determine consumption trends at least that far out. The per-barrel price for oil determines about half the cost of a gallon of fuel and there are very often wide variances between the pricing for oil and the pricing for fuel.
ASA Chief Economist Dr. Chris Kuehl hosts a live economic update webinar each month and also produces three economic update podcasts per month exclusively for ASA members.
Many analysts are now suggesting that a downturn in 2023 would likely be mild and not deep enough to impact fuel consumption.The per-barrel price for oil determines about half the cost of a gallon of fuel and there are very often wide variances between the pricing for oil and the pricing for fuel. Shutterstock Photo.
The American Supply Association continues to offer its members programs and initiatives that will best help it compete in an ever-changing business climate.
And now all ASA has to offer will be accessible on the association’s brand-new website at www.asa.net. The new site, slated to debut early in Q1 2023, will provide an overall better user experience with greater ease of navigation.
Visitors to www.asa.net will be able to access valuable information directly on the homepage, such as upcoming events, industry news and career recruitment tools. Visitors will experience an overall better registration/checkout experience for all ASA products, services and events.
The new, updated look provides the best reflection of ASA as the industry’s only national trade association, helping membership grow and members to feel even prouder to be a part of ASA.
ASA’s Insights weekly e-newsletter is another free benefit that helps keep ASA members updated on association happenings, as well as other important industry news, trends and best practices. To sign up, email info@asa.net
