As Appears in Heavy Duty Aftermarket Journal
Welcome to the "New Kid"
It is exciting to note that our historically insular truck parts and service business has interested someone enough for them to pay a very full price to buy themselves a seat in "our" game.
After all, we’ve worked hard at convincing ourselves that our business is different, not like any other distribution market. We reassure ourselves that change tends toward glacial in heavy duty. Big, well financed and sophisticated practitioners of supply chain management could care less about our overly complicated $15 billion market.
So let me be the first to extend a welcoming hand to this new player. Here is his resume (although with a spokesman like Dirty Jobs’ Mike Rowe, you feel like you already are buddies):
- He founded his wholesale electric motor sales and distribution business in Chicago in 1927 (about the same time as NAPA was getting going);
- To improve customer service, he opened a branch in Philadelphia in 1933. It was evident early on that local branch service would be an integral part of the company's future growth (He now has 430 branches in the US and155 in Canada);
- To remain the leader in the industry, he constantly seized technology opportunities early ... after all, he needed more than barcodes to keep up with all 153 countries to which he ships. (Sales today are about $7 billion ... $1.5 thru his website);
- His 4,000-page catalog is published annually, and offers his 1.8 million customers access to over 900,000 sku’s (including 14 categories in Fleet & Vehicle Maintenance);
- He is not fully participating in our annoyingly prolonged slowdown (His gross margin seems stuck at 41%, while operating earnings are up to 11.4%);
- He will probably be around for awhile (His share price has outrun the Dow Jones Industrials by about 45% lately).
While they list none of the readers of this as competitors, their catalog and product lines are in every one of your customers’ purchasing departments already. And they proudly point to over $ 675 million in sales of lines added since 2005. These guys are good. They reduced pick/pack/ship cycle time by 50% in just the last 24 months.
So join with me in welcoming Bill Grainger’s brainchild to the US fleet biz. (Check with your Canadian friends to check out their record up there- impressive!). Their acquisition of the $70 million Imperial Supplies operation in Green Bay certainly gives them the center seat and may allow them to name the game as well.
After all, they think hard about emerging trends ... can you say "3 screens and a cloud" ... at the Grainger Center for Supply Chain Management at the University of Wisconsin (the only endowed, university-based center specializing in supply chain management in the United States).
While some of us waste time wondering about CVSN merging with AAIA or TruckPride splitting from their automotive alter ego, real change is about to visit us with a vengeance.
- NAPA is dead serious about becoming "the NAPA of the heavy duty business", a goal pursued by everyone from Transcom to PACCAR Parts.
- FleetPride now has the savvy management and renewed financial backing to continue to outgrow almost anyone.
- New industry-wide software solutions are about to appear, after having completely changed other complicated equipment distribution markets. These are not vaporware, but proven solutions that could eliminate as much as 25% of the costs to serve HD parts and service customers.
Whether it will be Grainger’s entry or channel altering software creating virtual groups, now is a good time to put your head in swivel mode. Fundamental change will be here way before anything Obama cooks up.