Innovating the Distributor Value Proposition

Transcription

1 Innovating the Distributor Value Proposition Guy Blissett IBM George Vorwick United Electric Supply Andrew Berlin Berlin Packaging Dale Smith HD Smith January 29 th, 2014

2 Distributors acute need to define and innovate their value proposition is driving broad changes in the business Define Value Proposition The Brand Promise Deliver the Experience Customized, Omni-channel Act on Market Insights Segment, Allocate resources Innovate Business Model Differentiated, optimized Acquire Capabilities Analytics, Challenger Selling

3 Disintermediation continues to reshape many value chains prompting a greater focus on the value proposition CEOs Sales & Marketing Operations Two thirds of distributors see disintermediation exerting a Very Significant impact

4 Services will play a critical role in differentiating, and expectations for services revenue are increasing sharply CEOs Less than 5% 5% to 10% 10% to 20% 20% or more By % of distributors expect to generate 10% or more of their revenues from services 41% 5 Yrs ago Today In 2017

5 Distributor executives highlight the implications of these forces on the sales function and some performance gaps Most Important Sales & Marketing Worst Performance 1 Sales force collaborating effectively with customers 1 Measuring social media effectiveness and efficiency Sales force effectiveness at growing revenues with our existing customers Sales force effectiveness at improving profitability of our existing customers Increasing the productivity of the outside sales force 2 Leveraging social media 3 4 Adopting company's CRM application Sales force effectiveness at capturing / reporting insights 5 Increasing capabilities of outside sales force 5 Sales / Marketing effectiveness growing end demand

6 The past months have seen significant M&A and other business model transformation activity AmerisourceBergen forms alliance with UK and U.S. retailers for purchasing leverage Sysco s proposed acquisition of US Foods creates new competitive and capabilities landscape Strategic alliance to provide 3PL services to healthcare providers 3 Under 1 Roof joint venture allows HVAC, PVF and plumbing distributors to create one-stop shop M&A to add capabilities, geographic scope, and product categories Canada Mexico Safety Reconditioned Mexico MRO Marketplace MRO U.S. Scale Canada

7 Leading distributors are converting information into insights to support both new and existing offerings Traditional Value Drivers Future sources of value Emergent Value Drivers # of product lines, # of items, # of locations, delivery speed, price, features / function knowledge Market insights, customer / supplier collaboration, forecasting, operational / financial metrics, benefits realization Connects with customer s IT to provide real-time information Operating room procedural delivery service Offers suppliers web-to- EDI trading exchange Actionable intelligence about supply chain costs

8 George Vorwick President / CEO / Employee-owner United Electric Supply Wilmington, DE

9 United Electric Supply Company, Inc. We are. an ESOP a Regional Electrical Distributor 300+ Employee-owners serving customers in DE, PA, NJ, MD & VA Additionally We survey our customers using Net Promoter We conduct employee surveys every other year We are committed to Life-Long Learning We are beginning to sell High Value Services to our customers

10 Customer Value Proposition or more simply stated Why would a customer choose you as their supplier of choice? An un-scientific study undertaken over the past few years has produced the following phrases most often used in an attempt to answer this question.

11 Any of these sound familiar?

12 What if we took the time to learn how we could help our customers Jim Pancero You can always sell more, by strengthening your strategic selling skills.

13 Ranking What customers said was important to them 6.3 Keep their promises 6.22 Deliveries arrive when promised 6.11 Complete and accurate invoices 6.06 Provide accurate and timely price quotations 5.97 Speedy in responding to price and delivery inquiries 5.95 Being kept informed about changes in delivery dates 5.92 Having knowledgeable inside salespeople 5.91 Ability to respond to my questions and/or needs 5.87 Advice and technical support to solve problems 5.86 Easy, accurate ordering process Why Us Highly Disciplined Business: Lower Cost Competitive Advantage Make Life Easier 99.8% A item availability 2.5 Days return goods cycle time stock 95% Fill rate deliveries 99.6 Order accuracy 99.5% Inventory accuracy Reduce Risk Support Services: Cost reduction documentation and notification You can be more successful by aligning your business with us! Pro-Active Project Management GSA schedule holder small business authorized Lighting design with Certified Lighting Designers Financial Services: On-Line Account Management State and Local Sales Tax Compliance Assistance Terms and Conditions Guidance Counseling Services

14 Andrew Berlin Chairman & CEO Berlin Packaging

15 We start with the right mindset: To improve our customers bottom lines Customer Sales Customer Costs Customer Productivity

16 We go beyond product with services and an emphasis on operational excellence Visit PaintTheTarget.com for more info

17 We follow through with customer service that adds value in itself

18 Ultimately, we quantify our performance 99% On-time Delivery for 115 months in a row 41% Net Promoter Score, topping our industry $85 million Incremental profit to our customers last year

19 We are evolving to focus even more on the emotional drivers for our customers and us We exist to help people and companies be Greater, Faster. Visit GreaterFaster.com for more info

20 Dale Smith Chairman and CEO H.D. Smith Wholesale Drug Co.

21 Our Mission To be the preferred, customer-focused, national supplier of healthcare products and business solutions, improving the quality, safety and cost of patient care while maintaining the highest level of honesty and integrity. Strategic Intent To be the leader in controlling healthcare costs while maximizing patient outcomes

22 Facing the Forces of Change: Healthcare a state of uncertainty Traditional Pharmaceutical Wholesale Distribution Model is under attack Customer compensation/reimbursement/access Regulatory environment Increased manufacturer distribution restrictions Themes: Pharmaceutical product mix is changing distribution models evolving Specialty and Generics Push toward global generic sourcing Blurred Lines Vertical Integration if you can t negotiate additional price reductions partner or buy them (manufacturer, wholesaler, retailer)

23 U. S. Pharmaceutical Products $325.8 B was the total spend on U. S. Pharmaceuticals in 2012 $294.8 B (or 90.5%) went through pharmaceutical wholesalers $400B is the expected U. S. pharmaceutical spend in 2017 Major Wholesaler Initiatives McKesson Corporation Exploring global opportunities Cardinal Health - CVS joint generic sourcing AmerisourceBergen Corporation Walgreens Alliance Boots As the 4 th largest, but only privately held drug wholesaler, we are presented with unique opportunities and challenges to do things better, differently!

24 EXPANDING VALUE Helping our customers care for their communities requires more than product distribution. H. D. Smith is expanding our value proposition to the healthcare industry by: Developing value chain alliances Identifying underserved value chain roles as platforms for growth Focusing on end-to-end marketing philosophy and reimbursement

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26 Strategic Value Roadmap Define the different market forces/influencers for the different healthcare products market segments. Evaluate internal capabilities. Define future capabilities needed. Define specific strategies and action plans.