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Our Mission Statements

National Association of Wholesaler-Distributors To advocate its members’ interests on national public policy issues that affect the entire wholesale distribution industry. NAW assists merchant wholesaler-distributors to be the most efficient channel for bringing goods to market through benchmarking, strategic management information, networking, and high-level conferences. NAW serves as a mechanism, through its Association Executives Council, for the sharing of ideas, programs, and skills among the organization’s member national associations.

Wholesaler-Distributor Political Action Committee To advance the election of pro-business candidates to federal office. NAW’s Wholesaler-Distributor Political Action Committee seeks to mobilize the involvement of wholesaler-distributors in the federal electoral process through financial contributions and political education activities, including candidate endorsements and get-out-the-vote programs.

Contents

NAW Institute for Distribution Excellence

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To sponsor and disseminate research into strategic management issues affecting the wholesale distribution industry. The NAW Institute for Distribution Excellence aims to help merchant wholesaler-distributors remain the most effective and efficient channel in distribution.

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NAW Service Corporation

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To sponsor industry-wide service and product offerings that benefit wholesaler-distributors.

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12 14 15 16 16 17 18

Leadership Message State of the Wholesale Distribution Industry NAW Networks You With Your Peers, Not Your Competitors NAW Networks You With Government and the Electoral Process NAW Networks You With Industry Intelligence NAW 2014 Executive Summit NAW Networks You With Business Services NAW Member National Associations NAW Member Associate Associations Treasurer’s Report NAW Leadership NAW Staff

tel: 202-872-0885 • fax: 202-785-0586 • e-mail: naw@naw.org • web: www.naw.org


Leadership Message

NAW

Most will agree that 2013 was a year of sluggish economic recovery. Fortunately, our wholesale distribution industry saw growth this past year. In his “State of the Wholesale Distribution Industry” commentary on pages 2 and 3, NAW Senior Economic Advisor Alan Beaulieu reports that in 2013 total Wholesale Trade was up 4.2% from the year-ago level for total sales of $5.13 trillion. Durable Goods posted a 4.4% increase, while Nondurable Goods showed a 4.1% increase. And, employment increased 1.6% in 2013 to 5.8 million workers. Alan forecasts that NAW members can expect another growth year in 2014. As this year’s Annual Report cover portrays, if your company is an NAW Direct Member, you can be assured that NAW will help your firm reimagine its future. NAW will remain your advocate, assisting wholesaler-distributors to continue to be the most efficient channel in the supply chain. Direct Membership in NAW provides real value to your business in so many ways every day. To serve your business and other NAW Direct Member Companies, NAW • advocates your interests before the government • convenes high-level roundtables and conferences where you and your peers across the industry can roll up your sleeves and candidly discuss the business challenges that keep you up at night • provides groundbreaking, distribution-specific research and strategic management best practices that can’t be replicated across multiple lines of trade • gives you access to leading-edge products and services highly valued by your industry peers. This Annual Report is in part a recap of the12 months past. But more important, it is full of ideas and promise for the remainder of 2014.

Patrick L. Larmon NAW 2013 Chairman of the Board

Patrick L. Larmon, President and CEO of Bunzl Distribution USA, Inc., (left) served as NAW 2013 Chairman of the Board; Dan M. Blaylock, President of Adams-Burch, Inc. (seated) is NAW 2014 Chairman of the Board; and Dirk Van Dongen is NAW President.

On the following pages, we expand upon specific products and services for wholesale distribution executives, including: • Networking with Your Peers • Government Relations and Political Action • Industry Intelligence • Cost-saving Business Services. Our objective is to provide a clear explanation of the ways in which NAW can assist your company to take advantage of the opportunities before you, and you can reap the full benefits of NAW Direct Membership. Visit http://www.naw.org often to learn more. Please stay connected with NAW. We look forward to working with you this year and beyond.

Dan M. Blaylock NAW 2014 Chairman of the Board

NAW 2013 Annual Report

Dirk Van Dongen NAW President

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OPINION

• State of the Wholesale Distribution Industry

The U.S. economy was unfazed in 2013, a year marked with a number of dubious distinctions, including a “fiscal cliff” to begin the year, a government shutdown that lasted just over two weeks, a terrorist attack in Boston, and multiple other political and economic battles. Real GDP grew 2.7% for the year as a whole, the stock market hit record highs (although there have been pull-backs), and U.S. Industrial Production (our benchmark for the overall economy) rose 2.6% in 2013. Overall, it was a growth year for the U.S. economy, on target with what we told NAW Direct Members last year. Let’s take a look at how the yearly results matched our forecasts in Figure 1.

Key U.S. Industries Share of GDP

Wholesale Trade in 2013

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Total Wholesale Trade for the most recent 12 months as of first quarter of 2013 was up 4.2% from 2012, totaling $5.13 trillion. Nearly all segments of Wholesale Trade are up on the year, with the exceptions of Metals and Minerals and Sporting Goods, Games, Toys, and Jewelry. Additionally, there is weakness developing in Raw Farm Products, which will likely persist in the first half of 2014. Durable Goods ended the year up 4.4% and Nondurable Goods grew 4.1%. NAW Direct Members were able to grow and be profitable despite the uncertainties and headwinds.

Finance

19.9%

Manufacturing

12.2%

Health Care

7.6%

Retail Sales

6.1%

Wholesale Trade

5.6%

Construction

3.4%

Mining

1.9%

FIGURE 2

A growing labor market helped support U.S. economic growth in 2013, and the Wholesale Distribution Industry did its part. Wholesale Trade Employment averaged 5.8 million workers in 2013, a 1.6% gain from 2012. The economy as a whole added jobs at a 1.0% clip. Wholesale Trade Employment rising at a faster pace than the overall economy suggests the industry is improving.

Forecast Date

Forecast

United States GDP

Feb 2012

$15.818 Tr.

$15.966c

0.7%

United States Industrial Prod.

Mar 2011

99.9 (12MMA)

99.6

-0.3%

European Union Industrial Prod.

Jun 2012

101.9 (12MMA)

100.6

-1.3%

Improvement in Wholesale Trade is indicative of gains in the overall economy as shown in Figure 2. The Wholesale Trade Industry itself accounts for about 5.6% of the overall economy. Additionally, wholesaler-distributors are a crucial part of the supply chain in other larger sectors of the economy such as manufacturing, retail trade, and health care, meaning that Wholesale Trade’s contributions to the overall economy are much larger than the 5.6% figure would indicate.

Canada Industrial Prod.

Dec 2012

98.7 (12MMA)

97.8

-0.8%

The United States in 2014

China Industrial Prod.

Jun 2012

522.6 (12MMA)

520.1

-0.5%

Housing

Jan 2013

945 Ths Units

923

-2.3%

Retail Sales

Jul 2012

$2.189 Trillion

$2.2

0.5%

Employment

Jan 2012

144.3 Million

143.9c

-0.3%

Although results for U.S. Industrial Production (our benchmark for the overall economy) were on target with our forecast for 2013, we opted to push the forecast for 2014 higher, based on strongerthan-expected activity in some of the leading indicators, specifically the Purchasing Managers Index and U.S. Leading Indicator.

Actual 2013 Results to Key Forecasts Actual

Deviation from Forecast

FIGURE 1

We are still calling for rate-of-change decline in 2014 extending into 2015, and the economy’s rate of growth in 2014, at 1.9%, is expected to be below

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NAW

that posted 2.6% growth rate for 2013. We are still calling for a period of seasonal softness in late 2014 and early 2015, but the annual trend will not decline. The quantitative difference between the previous forecast and the revised forecast is illustrated by Figure 3. What this means for wholesaler-distributors is your seasonal activity in late 2014/early 2015 will be milder than previous years. Use the next three quarters of growth to prepare for this soft spot. Create new efficiencies to protect margins or expand into new regions, for example. There will be no need for any dramatic business shifts in late 2014. We continue to expect 2015 to 2017 to be growth years.

This article was written by Alan Beaulieu, NAW Senior Economic Advisor, and President of ITR Economics; and Jon Murphy, an economist at ITR Economics. For additional information, please call 603-796-2500 or visit www.itreconomics.com.

U.S. Industrial Production 2014 will likely be another year of political battles. The President expressed his desire to circumvent Congress to accomplish aspects of his agenda (an action which will surely draw the ire of Republicans). This is an election year, with control of the Senate at stake. Debt ceilings have not gone away nor hot-button issues like minimum wage and income inequality. This has been par for the course for much of the past six years and the U.S. economy has chugged along, largely uncaring of the political machinations of Washington. 2014 will be no different. Washington will have its political theater, and you ignore it at your peril; but don’t lose focus on the opportunities that are ahead of you. This is a time to carefully manage your cash flow given the projection of softness later this year, while implementing a longer-term growth plan that will require capital expenditure. Hunkering down and waiting for the clouds to pass will cost you in terms of opportunity and market position. Aggressively move out in anticipation of solid growth opportunities.

FIGURE 3

There are a number of factors that could weigh on the economy as we proceed through 2014 and may cause results to deviate from our new forecast. Some of these factors are: 1) Concerns about the sustainability of the stock market’s rise persist into the second quarter of the year. 2) The encouraging fourth quarter results in Housing Starts do not persist; home prices stall; investors become skittish. 3) Rising health care costs (insurance and actual care) sap the strength out of the consumer. 4) Europe and China slip back into recession as the U.S. consumer spends less. 5) QE tapering impacts more than just the government rate of interest.

NAW is pleased to join forces with Alan Beaulieu to produce NAW Advisor, a monthly, six-page, electronic economic business report. You’ll receive quick economic guidance from Alan on today’s wholesale distribution cycles and learn how these cycles will affect your business as you prepare for tomorrow’s economy. Delivered to your inbox, this condensed format takes only minutes to read. Subscribe at http://itreconomics.com/naw-advisor.

NAW 2013 Annual Report

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NAW Networks You With Your Peers, Not Your Competitors

Billion dollar company executives talk about challenges and strategies they tackle in their own companies in a noncompeting environment during NAW Executive Summits and Billion Dollar Company and Large Company Roundtables. Pictured left to right are Robert Mitchum, President and CEO of Network Services Company; Kathleen Mazzarella, Chairman, President, and CEO of Graybar Electric Co., Inc.; and Andre Lacy, Chairman of LDI Ltd., and a Past Chairman of the NAW Board of Directors.

Peer Groups Like None Other 4

As a federation of associations representing all lines of trade in the wholesale distribution industry, NAW is uniquely positioned to be the only portal for wide access to and exchange of valuable information and services among noncompeting peers within its membership. What makes NAW so different from all other associations is that our dynamic programs are individually designed to promote networking and benchmarking for you and your peers across the entire industry. NAW has created a number of “peer groups like none other” that offer you and other wholesale distribution executives endless opportunities to meet with and learn from your noncompeting peers. Through exchanging ideas with peers in other lines of trade, you can grow your business and gain a competitive advantage in your industry segment. To learn more, visit http://www.naw.org/memberbenefits/mindex.php.

High Marks for Networking at NAW Events NAW Direct Members consistently rate “networking” and valuable “information sharing” within small groups as two of the most important benefits of NAW Direct Membership. To be of highest value to participants, NAW roundtables are targeted toward specific sizes of companies and by executive responsibilities within a company. www.naw.org

Our Large Company (companies with sales of $100 million to $999 million) and Billion Dollar Company Roundtables focus on these firms because their collective success provides beneficial results for all-sized businesses in the wholesale distribution industry. NAW Direct Members consider benchmarking and networking with noncompetitors from other lines of trade as strategic tools to improve efficiency and effectiveness in operational practices. You and your peers rely on NAW events for practical, industrywide knowledge and information from experts in wholesale distribution.

Making the Most of Your Valuable and Limited Time The one thing wholesale distribution executives tell us they have least of is “time.” NAW events are short but information packed so the time commitment is minimal. There is enough time built in at NAW events for both learning experiences and networking in an intimate setting that offers a candid atmosphere for information exchange. Our Large Company and Billion Dollar Company Roundtables are held at the Hilton O’Hare in Chicago, which allows for quick in-and-out access for participants. The NAW Executive Summit, which is open to all NAW wholesaler-distributors and other interested parties, is held annually at the end of January in Washington, DC.


NAW

I have been attending the NAW Billion Dollar Company CEO Roundtable for many years. What makes these meetings unique is the chance to learn how other companies are dealing with similar strategy, policy, and operating issues. The agendas are filled with current topics important to all distribution executives, and the outside experts who speak are very insightful. James T. Ryan, Chairman, President, and CEO, W.W. Grainger, Inc.

NAW Large Company Program The NAW Large Company Program for NAW Direct Member Companies with sales of $100 million to $999 million continues to attract wholesale distribution executives looking to augment networking opportunities beyond their traditional industry segment. The NAW Large Company CEO/COO Roundtable is the primary event. The Large Company Community has a vested interest in the roundtable’s content because meeting topics are based on survey responses from that Community. As a result, group members are engaged and interactive in this informative roundtable. NAW also holds the Large Company CFO Roundtable and Large Company Operations Roundtable. To learn more about the NAW Large Company Program, visit http://www.naw.org/events.

NAW Billion Dollar Company C-Suite Roundtables In 2013 NAW held six daylong networking roundtables for our largest Direct Member Companies to address the special issues they face as Billion Dollar Companies. Participation in the roundtables is limited to the senior executive in the following areas: • • • •

Billion Dollar Company CEO Roundtable Billion Dollar Company CIO Roundtable Billion Dollar Company CFO Roundtable Billion Dollar Company Chief Legal Officer Roundtable • Billion Dollar Company Operations Roundtable • Billion Dollar Company HR Roundtable.

Many NAW Billion Dollar Direct Member Companies are represented at these roundtables. Executives tell us these roundtables are “burned into their calendars” because of their importance. To learn more about the Billion Dollar Company C-Suite Roundtables, visit http://www.naw.org/events.

Over the years, the NAW Large Company Roundtables have proved invaluable in running my business. In reality I don’t think I could buy at any price the access, networking, and advice that has come from the chance to debate some of the industry’s most difficult issues with other noncompeting but similarly situated CEOs. Mark W. Kramer, President and CEO, Laird Plastics, Inc.

Pictured left to right are Robert Taylor, President and CEO of Do it Best Corp., and a Past Chairman of the NAW Board of Directors; and Patrick L. Larmon, President and CEO of Bunzl Distribution USA, Inc., and Immediate Past Chairman of the NAW Board of Directors.

NAW 2013 Annual Report

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Peers (cont.) NAW Wholesale Distribution Manager’s Course—Geared to Distribution Rising Stars! The NAW Wholesale Distribution Manager’s Course (WDMC) has been updated for rising stars with new subjects even more relevant to today’s wholesale distribution managers and their business operations and taught by an energized faculty at The Ohio State University (OSU). This course is an exciting educational experience for anyone who wants to contribute to the success of his or her distribution company at an even higher level.

Warren Chaiken, President and COO, Almo Corporation

“AskNAW”®

This was a great week of education. It was the most effective training I have ever received relating to wholesale distribution. David White, Sales and Marketing Manager, Tri West Ltd

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I use ‘AskNAW’ on a frequent basis to poll colleagues in distribution who face similar issues and experiences, and I really appreciate the many quality answers and good ideas I receive. What I like most is that it gives me a quick read in real time on any topic or challenge and that helps me in my own decision making.

Ranked #4 in the United States on the 2013 Best Business Schools for Supply Chain and Logistics list by U.S. News & World Report, OSU’s Fisher College of Business boasts award-winning faculty with deep experience in teaching wholesale distribution industry rising stars. In addition to the valuable classroom teaching and exercises, distribution managers network with peers from other lines of trade within distribution. Course participants learn how their peers are tackling the same business challenges that they face. At this NAW premier educational event, participants get away from the office and spend five career-changing days reaching their business potential while learning specific ways to improve their company’s profitability. Equipped with new knowledge and the latest skills specific to the wholesale distribution industry, course participants return to their companies ready to impact their business now and for years to come. To learn more, visit http://www.naw.org/wdmc14.

NAW Direct Members can get answers to their unique questions or glean feedback about issues that affect their mission-critical projects using “AskNAW”®, a robust desktop resource. You may direct your questions to specific-size firms. NAW keeps all user information strictly confidential. NAW Direct Members who use “AskNAW”® tell us it is one of their most valuable “need-to-know” tools for getting comparison data and real-time information beyond their traditional lines of trade. To learn more, visit http://www.naw.org/asknaw/ask_help.php. Here are typical questions posed by networkers using “AskNAW”®: • Does your company encourage or discourage the use of social media by employees for marketing purposes? Do you limit access to social media in anyway? Do you have a formal policy that you are willing to share? • As a percent of sales, what is your firm’s marketing department spend? This would include personnel, website, branding, tradeshow, and other direct marketing costs. • Can you recommend an ERP consultant you have had success with in the last two years? If so, what software did the consultant help you implement?

During the NAW Wholesale Distribution Manager’s Course every June, dozens of managers come together for one week of comprehensive study on the business of wholesale distribution.

• With more and more documents (especially e-mail) being created electronically, how does your organization handle retaining all that information? Does your company have a specific policy regarding e-mail and how often e-mails are deleted and which types of e-mail may be saved?

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NAW Networks You With Government and the Electoral Process

NAW

A principal benefit of your NAW Direct Membership is the daily, intensive networking NAW conducts on your behalf with federal legislative and regulatory bodies in Washington, DC. By engaging the policy-making process, NAW connects the wholesale distribution industry with leading federal policy makers whose decisions impact the everyday operations of wholesale distribution companies. To learn more, visit http://www.naw.org/govrelations.

Your Voice in Our Nation’s Capital Through direct advocacy, leadership of and participation in coalitions, and grassroots advocacy, NAW supports legislation that helps you manage your business as you see fit so your business can earn and retain profits. NAW opposes legislation that impedes those objectives. Similarly, NAW participates in rule makings advanced by executive branch agencies to implement federal statutes, with the goal of securing the minimum degree of regulatory burden and cost to you and other wholesaler-distributors. In the last several years, NAW has participated in several lawsuits challenging regulatory actions that directly impact the workplace, extending our voice for the wholesale distribution industry into the federal courts.

NAW has exceeded my expectations and is probably one of the best values for the money that we’ve invested in a long time. W. Grady Rosier, President and CEO, McLane Company Inc.

Direct Advocacy NAW’s government relations department includes a team of advocates that carries the wholesale distribution industry’s message to federal policy makers. The team’s mission is to effectively convey the wholesale distribution industry’s views to Congress, the White House, and federal agencies. The re-election of President Barack Obama and modest Democrat gains in the U.S. Senate and U.S. House of Representatives bred little change in the profile of the political branches of the federal government. Consequently, NAW’s approach to advocacy in the 113th Congress has and will continue to reflect a fairly even balance between offense and defense. Throughout 2014, NAW will continue to work to identify and take advantage of legislative opportunities to benefit wholesaler-distributors that will become increasingly limited as the 2014 mid-term elections approach. At the same time, NAW will retain its focus on restraining the ability of executive branch agencies to accomplish through regulation what has been and is, for the present at least, not achievable through legislation.

Coalitions: Using the Strength of Our Industry NAW’s coalition activities are predicated on the principle of “strength in numbers,” perhaps the ultimate example of the value of networking. NAW is a leader in organizing and managing coalitions to address the wholesale distribution industry’s public policy priorities in Washington, DC. NAW represents more than 40,000 companies with places of business in all 50 states and nearly all 435 congressional districts—an economic constituency that is large, diverse, and when fully and appropriately engaged, politically formidable. When wholesaler-distributors are allied through NAW with like-minded organizations and their networks, our effectiveness is substantially strengthened.

NAW 2013 Annual Report

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Government (cont.) Grassroots Advocacy: Constituents Back Home Speak to Congress Our wholesale distribution industry plays an enormous role in achieving favorable legislative results when we speak to individual Members of Congress through the voices of constituents and voters from “back home” in the Members’ states and districts. NAW’s principal grassroots advocacy tool is the E-Alert Program. Through this program, NAW communicates with senior management of both NAW Direct Member Companies and Member Companies of NAW-affiliated Member Associations that cosponsor the program. They, in turn, communicate with their U.S. Senators and U.S. Representatives on important issues that move through the legislative process. E-Alert, currently cosponsored by 35 NAW Member Associations, enables you and other wholesaler-distributors to easily identify appropriate federal legislators, conveniently craft a written advocacy message to them, and deliver it quickly when it is needed most.

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NAW’s other signature member mobilization program is the Washington Action Network (WAN), which catalogs the personal relationships that exist between individual wholesaler-distributors and Members of both houses of Congress. WAN enables the NAW government relations team to tap the industry’s top-level contacts with Representatives and Senators at the most critical points in legislative initiatives. Participation in WAN is also open to NAW Member Associations that opt to cosponsor the program. Today, 56 NAW Member Associations participate.

NAW’s political operation is vast and powerful, tackling issues from health care reform to taxes. The Hill Newspaper

www.naw.org

I just used your E-Alert Program to contact my Congressman. It is a FANTASTIC tool for composing a concise, personalized, and meaningful message and getting it out quickly! Having the talking points side by side with the text of the message as I entered it made it SO EASY! I will be responsive to doing this in the future. Thanks! J. Christopher Smith, President and COO, H.D. Smith Wholesale Drug Co.

Policy Agenda: Serving Our Members’ Interests A divided legislative branch of government on Capitol Hill featuring a Republican majority in the U.S. House of Representatives and the U.S. Senate controlled by the Democrats produced little of substantive consequence in 2013. Senate passage of the Marketplace Fairness Act, a bill to empower the States to require remote sellers to collect and remit state sales taxes just as local brick-and-mortar sellers must do, was a victory limited by the bill remaining stalled in the House. More generally, other than the enactment of a “small ball” budget agreement negotiated by Rep. Paul Ryan (R-WI-1) and Sen. Patty Murray (D-WA), chairpersons of the House and Senate Budget Committees respectively, the legislative cupboard of the 113th Congress’ First Session was fairly bare. The majority-forced change in the Senate’s filibuster rules applicable to most presidential nominees served to intensify partisan rancor in Congress’ upper chamber. Health care continues to be a major contributor to the partisan angst that grips Capitol Hill. The botched roll-out of the Affordable Care Act (“ACA” or “Obama Care”) and delayed implementation of various ACA provisions engineered by the Obama Administration, including most notably the employer mandate (until 2015), has ratcheted up pressure on the political branches of government to consider corrective legislative measures. At the same time, Congressional Republicans continue to press for complete repeal of the President’s signature legislative achievement.


NAW

Rulemaking and the Regulatory Assault on Business While the midterm elections in 2010 removed much of the threat of enactment of anti-business legislation, the newly re-elected Obama Administration remains poised to pursue a regulatory agenda that will impact the ability of wholesalerdistributors to manage their businesses as they see fit. Hundreds of new and costly regulations are being promulgated to implement the new health care reform law. NAW has engaged the rulemaking process on several of these regulations since the March 2010 enactment of Obama Care. In addition, many of the agencies within the Department of Labor—notably the Occupational Safety and Health Administration, the Wage and Hour Division, and the Office of Federal Contract Compliance Programs—have implemented aggressive rulemaking programs that will affect every “regulated entity” in the country. Furthermore, the National Labor Relations Board (NLRB, which had seen its aggressive agenda stalled by multiple court actions challenging the constitutional right of the Board to act without a legally seated quorum, now has properly confirmed members and a working pro-labor majority. Increased rulemaking and case decisions are anticipated in the months ahead to advance policies that promote collective bargaining and union membership; effectively a back-door enactment of the Employee Free Choice Act through the regulatory process. NAW has joined with our coalition partners in confronting these regulatory threats in every way open to us, from the filing of comments and amicus briefs with federal agencies, to engaging with allies on Capitol Hill in conducting oversight investigations of the regulatory agencies and thorough reviews of agency funding. Most significantly, the Administration’s overreach has taken us into the federal courts where we have joined coalition partners in challenging several labor rules and NLRB decisions. So far, those court actions have seen positive results: NLRB proposed rules to require employers to post a “Notice of Employee Rights” and to speed up union certification elections (“Ambush” election rule) have both been struck down by the courts, and the Supreme Court will be deciding a case in 2014 challenging the constitutionality of President Obama’s recess appointments to the NLRB. Significant other court actions remain in the pipeline, and more are expected. We expect this regulatory effort—and our energetic response to it—to continue in 2014.

…NAW’s rack of advocacy positions makes the group a lobbying clearinghouse for Washington industry groups and a key member of any pro-business coalition inside the Beltway…In recent years, the group has become a behind-the-scenes force in business policy debates and major legislation… CEO Update

Political Action: Working to Elect Pro-Business Leaders Pro-business legislative victories, whether of an “offensive” or “defensive” nature, depend first and foremost on having women and men in the U.S. Senate and U.S. House of Representatives who will cast pro-business votes and lead on business issues. NAW’s Wholesaler-Distributor Political Action Committee (WDPAC) engages the political process and provides executives throughout the wholesale distribution industry with an important avenue for political action on behalf of business-friendly candidates for the Senate and House of Representatives. WDPAC maintains both a Political Action Fund (PAF) and a Corporate Political Education Fund (PEF). The corporate contributions that PEF receives “pay the bills” and fund wholesaler-distributor voter registration and get-out-thevote (“GOTV”) initiatives, enabling WDPAC to contribute to federal candidates every “hard dollar” of personal money that PAF raises. PAF, which given its purpose may accept only personal money voluntarily contributed, will contribute to as many pro-business candidates for federal office in the 2014 national elections cycle as the provided resources will allow. While the election results in 2012 were not good for business, WDPAC remains committed to the election of pro-growth, pro-free enterprise candidates in the 2014 elections, including an increase in business-friendly candidates to the Senate and the maintenance and growth of a pro-business majority in the House. Pro-business victories in the 2014 mid-term elections are critical to limiting what a lame-duck Obama Administration with a still-ambitious liberal agenda can achieve during the President’s final two years in office.

NAW 2013 Annual Report

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NAW Networks You With Industry Intelligence There are many ways in which NAW performs the networking function for NAW Direct Members even without putting you face-to-face with other industry executives. Only NAW regularly connects you with the finest industry intelligence so you can benefit from the best thinking about wholesale distribution and reach solutions to your day-to-day challenges.

NAW Institute for Distribution Excellence The NAW Institute for Distribution Excellence provides a comprehensive library of research, expert knowledge, and cutting-edge solutions on strategic management topics for wholesaler-distributors that no other organization can replicate across all lines of trade. Each year the NAW Institute produces publications in both print and electronic formats. To learn more, visit http://www.nawpubs.org.

2013 Releases

Customer Relationship Management can help wholesalerdistributors because CRM fills a void. Automation tools are common in all other aspects of running a distributor’s business, but they are sorely lacking in the sales organization. When aligned with an effective strategy and deployed with thorough planning, CRM will deliver data-driven business results. Increasingly, CRM is becoming necessary to stay competitive and improve profits. In the long run, CRM will be instrumental for distributors to survive and thrive in today’s economic environment.

Pricing Optimization: Striking the Right Balance for Margin Advantage By Pradip Krishnadevarajan, Senthil Gunasekaran, F. Barry Lawrence, Ph.D., and Brijesh Rao http://www.naw.org/po

Facing the Forces of Change®: Reimagining Distribution in a Connected World 10

minimize frustration and disruption, and achieve more targeted benefits and faster business results. This study provides a soup-to-nuts planning framework, best practices from leading distributors, and ready-to-implement management tools for engaging your leaders and salespeople.

By Guy Blissett http://www.naw.org/ftf13 Facing the Forces of Change® is the only major research study analyzing the future of wholesale distribution within multiple lines of trade. Since its inception in 1982, the landmark Facing the Forces of Change® series continues to provide insights about the overall future of wholesale distribution and the role of wholesaler-distributors. This 10th edition highlights the fact that there is no shortage of “forces of change” that will impact distributors over the next 3 to 5 years and transform the industry. There is also no shortage of opportunities for distributors to embrace and leverage these forces. Specifically, distributors must capitalize on opportunities in e-commerce, mobility, and social networking; embrace the full potential of advanced analytics; and reimagine both their role in the value chain and the structure and functions that comprise their organization.

Getting the Most Out of CRM: Best Practices for WholesalerDistributors By Mark Dancer http://www.naw.org/crm

Forward-thinking wholesaler-distributors who strive for above-average returns in the “New Normal” by leveraging pricing optimization best practices that are rooted in sound analytics are reading this groundbreaking study. The time has come for distributors to address their concerns about shrinking margins by upping their game on pricing decisions. If distributors keep doing more with less, they’ll soon find themselves doing everything with nothing! The issue of margin erosion will never end if distributors do not get creative—first with their pricing methods, and second with their value proposition. Issues involving pricing methods are more critical to profitability and so should be tackled right away. This comprehensive study will help you achieve the right pricing solution for your business. This study is jam-packed with 9 best practices from actual wholesaler-distributors, 40 action steps that your firm can implement immediately, and 73 examples from wholesaler-distributors across many lines of trade!

2014 Scheduled Releases • Best Sources for Successful Sales and Leadership Talent in Wholesale Distribution By Sally Stevens, Chally Group Worldwide • Innovation in Wholesale Distribution By Dirk Beveridge, 4th Generation Systems

By following the sage advice offered by CRM-experienced wholesaler-distributors in this deeply researched study, you will avoid common mistakes, overcome predictable challenges, www.naw.org

• Digital Channels in Distribution By Mark Dancer, Channelvation, Inc.


NAW

In my opinion, this 10th edition of Facing the Forces of Change is the best one so far. With insightful commentary and practical examples, it shows how technology is transforming our business environment and our customers’ expectations. Distribution leaders across all lines of trade can use this report as a framework for making strategic decisions that will have a long-term impact on their relevance to their customers and the success of their companies. I highly recommend it. Kathleen Mazzarella, Chairman, President, and CEO, Graybar Electric Co., Inc.

Council for Research on Distributor Best Practices The NAW Institute for Distribution Excellence and Texas A&M University are engaged in an alliance dedicated to further the understanding and application of best practices in wholesale distribution. This alliance created the Council for Research on Distributor Best Practices (CRDBP). Its mission is to create strategies for competitive advantage for wholesaler-distributors through development of research, tools, and education. The CRDBP organizes and operates educational consortia on important business topics for interested wholesale distribution companies of all sizes and lines of trade. To learn more, visit http://www.naw.org/crdbp/about.php.

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The 2014 consortium is titled, “Optimizing Human Capital Development.” To learn more, visit http://www.naw.org/crdbp/human-capital-development.php.

NAW Partners with Chally Group Worldwide

NAW SmartBrief

NAW is partnering with Chally Group Worldwide to provide talent management tools for wholesaler-distributors. A global sales force potential and performance measurement firm, Chally utilizes its industry-leading research, predictive analytics, and advisory services to ensure that you and other wholesaler-distributors have the vital information you need to make critical talent management decisions related to election, development, alignment, and succession planning. Chally helps wholesaler-distributors identify the business-critical and predictive competencies, skills, and behaviors required for success in key sales and leadership roles. To learn more about Chally’s services, visit http://www.naw.org/busservices/chally.php.

NAW SmartBrief is the wholesale distribution industry’s free e-newsletter that more than 27,000 distribution executives depend on for the latest industry information and receive four times per week. Each issue contains links to full-length business strategic management and trends articles that are wholesale distribution specific. Sections cover Top Industry Story, Operations and Technology, Sales and Marketing, The Business Leader, Policy Watch, and an industry job board. To sign up, visit http://www.smartbrief.com/naw. Job Board: Advertise your company’s open positions in NAW SmartBrief: http://jobs.smartbrief.com/post/naw.

NAW 2013 Annual Report


NAW 2014 Executive Summit A strong showing of leaders from diverse wholesale distribution lines of trade came together in January 2014 in Washington, DC, for the NAW Executive Summit. Many participants attend each year because it gives them the opportunity at the start of the new year to discuss industry issues with each other and with top leaders in business, government, and wholesale distribution.

The NAW 2015 Executive Summit will be held January 27–29, in Washington, DC. For a detailed agenda when it becomes available, visit http://www.naw.org/es15. Here are highlights from the NAW 2014 Executive Summit. To see more photos and view the speakers’ presentations, visit http://www.naw.org/es14.

In the first business session of the NAW Executive Summit, author Guy Blissett (seated third from the left) discussed “Innovating the Distributor Value Proposition” from NAW’s latest trends study, Facing the Forces of Change®: Reimagining Distribution in a Connected World. Joining Guy were three distribution executives who talked about their companies’ successes in delivering value to their customers. They were (left to right) Dale Smith, Chairman and CEO of HD Smith Wholesale Drug Co.; George Vorwick, President and CEO of United Electric Supply Co. Inc.; and Andrew Berlin, (standing) Chairman and CEO of Berlin Packaging.

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During the NAW WholesalerDistributor Political Action Committee (WDPAC) reception and dinner, Haley Barbour (right), former two-term Governor of Mississippi and former Chairman of the Republican National Committee, greeted attendees. He is shown here chatting with John Tracy, CEO of Dot Foods Inc., and a Member of the NAW Board of Directors.

Patrick L. Larmon, President and CEO of Bunzl Distribution USA, Inc., gave his Chairman's Address: “Reimagining Distribution's Value Proposition,” culminating his year as NAW 2013 Chairman of the Board.

Discussion Roundtables for wholesaler-distributors and manufacturers are considered by many attendees to be a favorite part of the NAW Executive Summit program every year. Roundtable discussions give participants ample time to share ideas with noncompetitors on key business issues facing wholesaler-distributors.

www.naw.org


NAW

In the second session focused on findings in NAW’s Facing the Forces of Change® trends study, author Guy Blissett (standing far right), guided NAW Executive Summit attendees through a discussion of the new role of marketing in wholesale distribution. Sharing the stage with Guy and discussing the topic were two distribution executives: Peter Bingaman (left), Vice President of Marketing and Communications at MSC Industrial Supply Co.; and Scott Withers, Chief Information Officer at C.H. Briggs Company.

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Jade West, NAW Senior Vice President of Government Relations, handicapped the political and legislative prospects for the year and provided an update on workplace regulations in the pipeline.

Networking with peers who aren’t competitors during business sessions is one of the best features of attending the NAW Executive Summit.

Alan Beaulieu, NAW Senior Economic Advisor, and President of ITR Economics, delivered the NAW Economic Forecast for 2014–15, providing both a macro forecast for the U.S. economy and a more focused forecast for various parts of the wholesale distribution industry.

Stuart Varney, (right) Host of “Varney & Company” on the FOX Business Network, closed the NAW Executive Summit with an analysis of what lies ahead for the economy. Following his talk, he greeted attendees and is seen here chatting with Joseph Nettemeyer, President and CEO of Valin Corporation, and a Member of the NAW Board of Directors.

NAW 2013 Annual Report


NAW Networks You With Business Services NAW Service Corporation

Cash Management

NAW networking also means connecting NAW Direct

Through the NAW/TransFirst Payment Solutions Program, you can gain access to a much-improved payment processing product called TransFirst SmartPay. It is a web-based payment solution that helps your firm process credit cards and checks in person, on the web, or over the phone. In addition, it provides you with easy ways to begin taking eChecks; and to set up recurring payments, web payments, and e-mail invoicing.

Members with business services that reduce your operating costs. The NAW Service Corporation leverages the collective purchasing power of firms across the wholesale distribution industry to find and offer high-quality business services designed to meet the specific needs of wholesaler-distributors at very favorable prices. To learn more, visit http://www.naw.org/busservices.

Voluntary Workplace Benefits

Car Rental

The NAW/AFLAC (American Family Life Assurance Company) Program makes products and services available to help you if your firm is struggling to control health benefit costs while continuing to offer your employees benefits, so you can continue to compete for and retain top talent.

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By leveraging our large company base, NAW has secured a special benefits program through Aflac that offers many employer services at no direct cost to the employer and includes the following voluntary products: • • • •

Life Insurance—Term, Universal (UL), and Whole Life Individual Short-Term Disability Insurance Group Critical Illness Insurance Accident Insurance.

The voluntary products are presented by a hand-picked benefits counselor and come with Special Underwriting Features that normally are reserved for larger companies such as competitive premium rates and more relaxed guarantee issue guidelines and participation requirements.

Financial Intelligence Through the NAW/Cortera Program, you have access to the most accurate information about customers and business partners. Cortera provides the insights you need into your riskiest and most collectible accounts and lets you pinpoint areas of growth. Cortera PULSE, the flagship product, lets you see your entire customer portfolio through daily e-mail alerts. It also shows you where there is growth within your existing customer base. Cortera PULSE provides a powerful intelligence solution for wholesaler-distributors of all sizes.

www.naw.org

Under the NAW/Hertz Business Account Program, enrolled firms receive special, low NAW-negotiated rates. In addition, your company rental activity is tracked, and your company will earn one Free Rental Day Certificate for every 15 days of qualifying rentals—in effect, earning an additional discount. And, Hertz is offering a one-year complimentary Hertz #1 Club Gold® membership for all employees who travel using your company’s premier car rental service, a $50 annual value per membership. Periodic mailings from Hertz will provide you with special added benefits, such as one car class upgrades.

Freight and Air Shipping NAW understands the importance of keeping operating costs down, which is why we are pleased to extend the NAW/UPS Savings Program to you. This program is designed specifically to meet your shipping needs and offer a savings solution that helps increase your bottom line. This program offers more service options, superior grounddelivery coverage, more than 60,000 drop-off points, and overnight delivery by 10:30 a.m. to more zip codes than any other carrier. You will enjoy the convenience of the same drop-off location and the same driver for your air and ground packages, so there is no need to separate your packages. You will receive some of the most competitive rates available on shipping services: up to 36% off UPS Air letters*, up to 24% off UPS ground shipments, and 70%–84% off Freight LTL shipments over 150 lbs. Enrollment is easy and there are no fees or minimum shipping requirements. Plus, you can receive these discounts even if you have an existing UPS account.


NAW Member National Associations Association For Manufacturing Technology (The) ...........AMT American Supply Association....................................................ASA American Veterinary Distributors Association ................AVDA American Wholesale Marketers Association ..................AWMA Associated Equipment Distributors........................................AED Association for Hose & Accessories Distribution .......NAHAD Association of Millwork Distributors ...................................AMD Association of Pool & Spa Professionals (The) ...................APSP Automotive Aftermarket Industry Association..................AAIA Bearing Specialists Association ..................................................BSA Business Solutions Association...............................................BSOL Ceramic Tile Distributors Association ..............................CTDA Commercial Vehicle Solutions Network ............................CVSN Copper & Brass Servicenter Association .............................CBSA

National Beer Wholesalers Association ............................NBWA National Fastener Distributors Association ......................NFDA National Grocers Association..................................................NGA National Insulation Association ...............................................NIA National Marine Distributors Association ......................NMDA National Wood Flooring Association................................NWFA North American Association of Floor Covering Distributors .........................................................................NAFCD North American Association of Utility Distributors ........................................................................NAAUD North American Building Material Distribution Association..........................................................................NBMDA North American Wholesale Lumber Association, Inc..................................................................NAWLA NPES The Association for Suppliers of Printing, Publishing & Converting Technologies ............................NPES NPTA Alliance.........................................................................NPTA

Door & Hardware Institute ......................................................DHI Education Market Association..................................EDMARKET Energy Equipment & Infrastructure Alliance........................EEIA Equipment Marketing & Distribution Association ........EMDA Fertilizer Institute (The)..............................................................TFI Food Industry Suppliers Association ......................................FISA Food Marketing Institute ...........................................................FMI Foodservice Equipment Distributors Association ............FEDA FPDA Motion & Control Network (The).........................FPDA Gases and Welding Distributors Association ..............GAWDA Health Industry Distributors Association ..........................HIDA Healthcare Distribution Management Association.......HDMA Heating, Air-conditioning & Refrigeration Distributors International.................................................HARDI Independent Distributor Association......................................IDA Industrial Supply Association .....................................................ISA International Association of Plastics Distribution.............IAPD International Foodservice Distributors Association..........IFDA International Sanitary Supply Association ............................ISSA Irrigation Association (The)..........................................................IA Material Handling Equipment Distributors Association .........................................................................MHEDA Metals Service Center Institute..............................................MSCI Motorcycle Industry Council ...................................................MIC National Association of Chemical Distributors ..........NCHEM National Association of Container Distributors ............NACD National Association of Electrical Distributors................NAED National Association of Flour Distributors, Inc...............NAFD National Association of Sign Supply Distributors .........NASSD National Association of Sporting Goods Wholesalers.........................................................................NASGW

Outdoor Power Equipment & Engine Service Association Inc...................................................................OPEESA Pet Industry Distributors Association ..................................PIDA Petroleum Equipment Institute..................................................PEI Power Transmission Distributors Association, Inc..........PTDA Professional Beauty Association................................................PBA Retail Packaging Association ....................................................RPA Secondary Materials and Recycled Textiles Association ...........................................................................SMART Security Hardware Distributors Association.....................SHDA Textile Care Allied Trades Association...........................TCATA United Producers, Formulators & Distributors Association............................................................................UPFDA Water and Sewer Distributors of America.....................WASDA Wholesale Florist & Florist Supplier Association ......WF&FSA Wine & Spirits Wholesalers of America, Inc...................WSWA Woodworking Machinery Industry Association .............WMIA

“

The NAW Association Executives Council meetings are my primary professional development tool as an association CEO because the content is distribution trade association specific and what I learn from the best association executives in distribution is invaluable. Talbot Gee, Heating, Air-conditioning & Refrigeration Distributors International (HARDI)

NAW 2013 Annual Report

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NAW Member Associate Associations National Convenience Stores Distributors Association ..........................................................................NACDA New York State Beer Wholesalers Association ............NYSBW North Central Wholesalers Association ..........................NCWA

Associated Beer Distributors of Illinois................................ABDI Association of Ingersoll-Rand Distributors ........................AIRD AscdiNatd ..................................................................ASCDINATD Canadian Association for Pharmacy Distribution Management ......................................................................CAPDM Canadian Institute of Plumbing & Heating ......................CIPH

Ohio Association of Wholesaler-Distributors................OAWD Pacific Southwest Distributors Association ........................PSDA Pacific-West Fastener Association ......................................PWFA

Electro-Federation Canada, Inc. ..............................................EFC

Southern Wholesalers Association ........................................SWA

Heating, Refrigeration and Air Conditioning Institute of Canada ................................................................HRAI

Western Suppliers Association ................................................WSA Wholesale Beer Distributors of Texas ..............................WBDT Wholesale Beer & Wine Association of Ohio ............WBWAO Wholesalers Association of the Northeast........................WANE

Maryland Association of Wholesaler-Distributors, Inc. ..............................................MAW Midwest Distributors Association ........................................MDA Mississippi Malt Beverage Association ..............................MMBA

16 Sharing discussions and gaining insights from other association executives are key reasons NAW Association Executives Council (AECs) leaders come together for the AEC Winter and Summer Meetings each year. In the left photo (clockwise from upper left) are Patricia Lilly, representing the Security Hardware Distributors Association, The FPDA Motion & Control Network, and the Wholesale Florist & Florist Supplier Association; Ralph Suppa of the Canadian Institute of Plumbing & Heating; Rick McCarten of the Electro-Federation Canada Inc.; and Kathy Van Kleeck of the Motorcycle Industry Council. In the next photo right to left are Joe Thompson of The Association for Hose & Accessories Distribution and Tim Buche of the Motorcycle Industry Council.

Treasurer’s Report: December 1, 2012 – November 30, 2013 Revenue Total:

$6,781,000

NAW:

$5,700,000

Includes dues, publications, seminars, annual meeting, coalitions

NAW/SC:

$699,000

Includes health and business insurance, car rental, freight and air shipping, cash management, other programs

WDPAC:

$274,000

Includes Political Action Fund, Corporate Political Education Fund

NAW Institute for Distribution Excellence:

$108,000

Includes contributions, publications royalties

Expenses Total:

$6,781,000

NAW:

$5,258,000

Includes publications, seminars, annual meeting, operations, provision for reserves and government relations

NAW/SC:

$1,146,000

Includes health and business insurance, car rental, freight and air shipping, cash management, other programs

WDPAC:

$234,000

Includes candidate contributions, operations

NAW Institute for Distribution Excellence:

$143,000

Includes project grants, operations Robert Taylor, 2013 NAW Treasurer

www.naw.org


NAW Leadership

NAW

2014 NAW Board of Directors

2014 Wholesaler-Distributor Political Action Committee Board of Directors and Officers

Chairman of the Board Dan M. Blaylock Adams-Burch, Inc.

Chairman James K. Risk III Kirby Risk Corporation

Chairman-Elect Manuel Perez de la Mesa POOLCORP

Andre B. Lacy LDI, Ltd.

First Vice Chairman Richard W. Schwartz WinWholesale Inc.

William A. Parsley Carswell Distributing Company W. Grady Rosier McLane Company Inc.

Raymon A. York Ewing Irrigation Products ••• Secretary and Executive Director Jade West National Association of Wholesaler-Distributors Treasurer Dirk Van Dongen National Association of Wholesaler-Distributors

Second Vice Chairman John Tracy Dot Foods Inc.

Robert Taylor Do it Best Corp.

Immediate Past Chairman of the Board Patrick L. Larmon Bunzl Distribution USA, Inc.

2014 NAW Institute for Distribution Excellence Board of Directors and Officers

Secretary Joseph Nettemeyer Valin Corporation Chairman, Subcommittee on Budget and Finance, and Treasurer Mark W. Kramer Laird Plastics, Inc. Chairman of the AEC Chris L. Jahn The Fertilizer Institute Chairman-Elect of the AEC Nancy Cueroni National Marine Distributors Association Outdoor Power Equipment & Engine Service Association Past Chairman of the AEC Tim Buche Motorcycle Industry Council

Chairman of the Board Joseph Nettemeyer Valin Corporation Vice Chairman Patricia A. Lilly Security Hardware Distributors Association The FPDA Motion & Control Network Wholesale Florist & Florist Supplier Association

George Pattee Parksite Inc. Matthew Rowan Health Industry Distributors Association Larry J. Stoddard RelaDyne Ralph Suppa Canadian Institute of Plumbing & Heating

Ron E. Calhoun The Palmer-Donavin Mfg. Co.

Douglas W. York Ewing Irrigation Products

Talbot Gee Heating, Air-conditioning & Refrigeration Distributors International

Bruce Zwicker JJ Haines & Co. Inc.

Deborah Hamlin Irrigation Association Kevin Kampe Womack Machine Supply Co. Kathleen Mazzarella Graybar Electric Co., Inc. Michael Medart Medart Marine Thomas Naber National Association of Electrical Distributors William A. Parsley Carswell Distributing Company

NAW 2013 Annual Report

••• Executive Director Ron Schreibman National Association of Wholesaler-Distributors President and Treasurer Dirk Van Dongen National Association of Wholesaler-Distributors Secretary George Keeley Keeley, Kuenn & Reid

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About NAW The National Association of Wholesaler-Distributors is composed of direct member companies and a federation of international, national, regional, state, and local associations and their member companies, which collectively total more than 40,000 companies. In addition to its government relations program, NAW’s scope encompasses the activities of the Wholesaler-Distributor Political Action Committee, the NAW Institute for Distribution Excellence, and the NAW Service Corporation.

NAW Staff Jim Anderson Vice President–Government Relations, NAW Political Director, WDPAC janderson@naw.org Katina Beale Receptionist, NAW kbeale@naw.org Sasha Beckford Computer Operations Assistant, NAW sbeckford@naw.org Tamela Blalock Director–Members Services, NAW tblalock@naw.org Beth Rivera Cruz Vice President/Controller, NAW bcruz@naw.org Joy Goldman Vice President–Administrative Services, NAW Manager–Government Relations, NAW Manager–Internal Operations, WDPAC jgoldman@naw.org Susan Hodge Manager–Computer Operations, NAWSC shodge@naw.org Adam Isenberg Director–Corporate Relations, NAW aisenberg@naw.org Shawntay Jeffries Administrative Assistant– Membership Administration, NAW sjeffries@naw.org David Mikulka Manager–Mailroom Operations/ Printing Services, NAW dmikulka@naw.org Tara Mostatab Communications Assistant, NAW tmostatab@naw.org

1325 G Street NW, Suite 1000 Washington, DC 20005-3134 Tel: Fax: E-mail: Web:

202-872-0885 202-785-0586 naw@naw.org www.naw.org

Thuy Nguyen Senior Accountant, NAW tnguyen@naw.org Wendy Pasley Office Assistant, NAW wpasley@naw.org John Peter Senior Vice President–Corporate Relations, NAW jpeter@naw.org Ron Schreibman Senior Vice President–Strategic Direction, NAW Executive Director, NAW Institute for Distribution Excellence rschreibman@naw.org Anthony Simone Vice President/General Manager, NAWSC asimone@naw.org Ruth Stadius Director–Communications, NAW rstadius@naw.org Mary Ann Thompson Senior Accountant, NAW mthompson@naw.org Dirk Van Dongen President, NAW President/Treasurer, NAW Institute for Distribution Excellence President, NAWSC Treasurer, WDPAC dvandongen@naw.org Jade West Senior Vice President–Government Relations, NAW Executive Director, WDPAC jwest@naw.org

NAW 2013 Annual Report  

NAW

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