INSEAD Library

Includes bibliographical references

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Facing the Forces of Change Lead the Way in the Supply Chain Contents Acknowledgments........................................................................................... vii About the Author............................................................................................. xi Foreword.......................................................................................................... xiii Introduction ....................................................................................................... 1 Seeing the Big Picture ........................................................................................................ 2 Applying Facing the Forces of Change to Your Company............................................... 6 Executive Summary........................................................................................... 9 Chapter One: Private Label Products.................................................................................. 9 Chapter Two: Demand-Driven Channels.......................................................................... 10 Chapter Three: New Profit Models................................................................................... 10 Chapter Four: Connected Customers................................................................................ 11 Chapter Five: Emerging Trends ....................................................................................... 11 Chapter Six: Construction Markets .................................................................................. 12 Chapter Seven: Industrial and Commercial Markets........................................................ 12 Chapter Eight: Retail Consumer Markets......................................................................... 13 PART ONE: Trends Changing Wholesale Distribution .......................... 15 CHAPTER ONE: Private Label Products ................................................ 17 Summary...........................................................................................................................17 Many Wholesaler-Distributors Will Market Their Private Label Products ....................18 Global Sourcing Is Accelerating Private Label Growth.................................................. 20 Private Label Products Will Strengthen Distributors' Relationships with Customers .....................................................................................23 Private Label Growth Will Strain Distributors' Relationships with Suppliers . . . ......... 26 Action Ideas......................................................................................................................27 Questions for Management Discussion ...........................................................................30 CHAPTER TWO: Demand-Driven Channels........................................... 31 Summary...........................................................................................................................31 Demand-Driven Channels Come to Wholesale Distribution Channels........................... 32 The Wholesale Distribution Order Stream Will Be Automated...................................... 34 Suppliers Will Gain Visibility into Wholesaler-Distributors' Product Movement Data.............................................................................................. 36 Wholesaler-Distributors Will Gain More Visibility into a Customer's Product Usage ................................................................................ 38 Wholesaler-Distributors Will Adopt Automatic Product Identification Technologies..........................................................................................40 Manufacturer Strategies Will Hold Back Demand-Driven Channels in Some Lines of Trade................................................................................................43 Action Ideas......................................................................................................................44 Questions for Management Discussion ...........................................................................47 CHAPTER THREE: New Profit Models......................................................49 Summary...........................................................................................................................49 Wholesaler-Distributors Will Generate More of Their Margins From Suppliers. ..........50 Channel Compensation Will Migrate to Pay-for-Performance Models...........................53 Demand-Driven Channels Will Enable Pay-for-Performance Models ...........................54 Wholesaler-Distributors Will Emerge as the Preferred Fee-for-Service Logistics Providers ......................................................................................................56 Logistics Companies Will Struggle to Compete with Wholesaler-Distributors . . ......... 58 Fee-Based Services from Wholesaler-Distributors Will Keep Growing......................... 60 Action Ideas......................................................................................................................64 Questions for Management Discussion ...........................................................................68 CHAPTER FOUR: Connected Customers ................................................ 69 Summary..........................................................................................................................69 Business Will Use the Internet in the Same Ways Consumers Do ................................ 70 Many (But Not All) Customer Interactions Will Migrate Online................................... 71 Wholesaler-Distributors' Marketing Budgets Will Move Online .................................. 76 Customers Will Get Independent Pricing Information Online........................................79 Customers Will Collaborate Via Online Forums............................................................ 80 Manufacturers Will Expand Direct Online Customer Interactions.................................83 Action Ideas.....................................................................................................................85 Questions for Management Discussion .......................................................................... 90 CHAPTER FIVE: Emerging Trends..........................................................91 Summary..........................................................................................................................91 Acquisition Activity........................................................................................................ 91 The Changing U.S. Workforce ....................................................................................... 96 A Slowdown in Commodity Prices................................................................................. 99 PART TWO: Detailed Results by Major Markets................................... 103 CHAPTER SIX: Construction Markets ...................................................105 Summary..........................................................................................................................105 Market Overview.............................................................................................................106 The Role of Wholesale Distribution................................................................................109 Trends for Construction Markets.................................................................................... 113 CHAPTER SEVEN: Industrial and Commercial Markets ......................123 Summary..........................................................................................................................123 Market Overview.............................................................................................................124 The Role of Wholesale Distribution................................................................................129 Trends for Industrial and Commercial Markets ............................................................. 132 CHAPTER EIGHT: Retail Consumer Markets....................................... 143 Summary........................................................................................................................ 143 Market Overview........................................................................................................... 144 The Role of Wholesale Distribution.............................................................................. 146 Trends for Retail Consumer Markets ............................................................................150 Appendix A: About This Report ........................................................... 157 Appendix B: Market Groups for NAW Member Associations............159 Appendix C: Wholesaler-Distributor Revenues in Selected Machinery and Equipment Lines of Trade ......................................................... 167 Endnotes.................................................................................................. 169