AWMA Buyers Program Opens 2010 AWMA Show; Draws Rave Reviews
LAS VEGAS -- A special program designed specifically for distribution company buyers opened the 2010 AWMA Show in Las Vegas and featured a spirited discussion led by top industry experts on steps companies can take to improve their bottom line. Attendees said they will go home with invaluable takeaways from the session.
The Buyers Program, moderated by industry consultant Kit Dietz, Dietz Consulting, LLC, kicked off some 15 hours of educational programs that will be offered to AWMA Show attendees, and was provided at no additional charge. A standing room-only crowd heard discussions on topics geared to helping buyers and other team members work within their companies towards the overall goal of improving profits.
One session of special interest to many attendees covered ways that companies can purchase products through e-procurement solutions – “reverse auctions” – that drive lower prices, reduce procurement time, expand supplier choice, and increase profit margins without affecting product quality or customer service. Even as the session continued, attendees sent instant messages to AWMA staffers asking how they can get more information.
Porter Montgomery and Brett Melvin, Principals, Category One, encouraged companies to consider the reverse auction option, which allows a distributor to request bids on a product according to precise specifications and within one hour determine the lowest possible cost for that product. Savings, they said, average between 10 and 35 percent, with the actual purchasing cycle reduced by as much as 50 percent.
To take advantage of this opportunity, companies need to work with e-procurement suppliers like Category One, which run the reverse auctions for them under contract. Such suppliers, Melvin said, have online lists of vendors that have signed up to participate in reverse auctions as a way of increasing their business, even though pricing will be lower than through traditional buying practices.
“It squeezes the supply chain all the way down,” Melvin said. “Bidders see their competitors’ prices, although they can’t see their name. It comes down to, ‘Maybe I need to sharpen my pencil to get this business.’ The more vendors we can get bidding in the process, the better.” He showed an actual example of a company that ran an online reverse auction on products valued at $781,000, and within 49 minutes the low bid was set at $461,000.
Show attendees can learn more about the process by visiting Montgomery and Melvin in AWMA Resource Central on the trade show floor during show hours.
The Buyers Program was opened with a presentation by Paul Van Stedum, Director of Industry Solutions, Manhattan Associates, Inc., who discussed the importance of using smart forecasting methods to make the most intelligent – and profitable – buys, as well as the critical need for buyers to collaborate with warehouse operations to maximize efficiency.
Van Stedum pointed out the importance of forecasting inventory needs in detail, including the various needs for specific products each day of the week, of forecasting inventory needs for seasonal products, and of predicting lead times needed to get product ordered, received, and in the warehouse available for distribution.
He said collaboration between purchasing and operations will help both departments improve efficiency, reduce hassles and points of tension, and, ultimately, improve the bottom line as unnecessary labor is avoided.
“The foundation for success is communications,” he said, “sharing future plans and data, and not just one way. In most companies, when push comes to shove everybody will get together and put out the fire. But this needs to be ongoing. Departments need to understand where each other are coming from.”
In fact, Van Stedum recommended that companies have buyers work side-by-side for a day with operations personnel and vice versa, so each can have a good idea of the others’ responsibilities and day-to-day concerns.
The need for close cooperation between buyers and warehouse operations rang true for Latha Coleman, a buyer with Standard Distributing. “With an open relationship with operations, they can keep you informed as to when something is selling quickly, for example. It affects how I order things. The more you can understand the overall operation of the business, the more you can increase your effectiveness.”
The Buyers Program was closed with a spirited presentation by Doug MacKay, President, The Glen Douglas Group, who used a game show quiz to launch his program on “Customer Focus: Key to SUCCESS – Buying and Selling.” His session drew rave reviews from attendees, who said it provided practical, down-to-earth information on how to build and maintain solid relationships with customers.
“He really showed how to work in cooperation with your customers to help grow the business,” said Brad Walters, a buyer at INW Indian Nation Wholesale Co., a subsidiary of Stephenson Wholesale Co., Inc.
Coleman agreed, pointing out that understanding the convenience store’s customer is critical to understanding the c-store’s product needs and helping the buyer select the right products.
“That presentation was worth the price of admission,” said Frank Davoli, director of purchasing at Richmond-Master Distributors. “We need to stop talking and start listening to the people within the four walls of our businesses. The toughest negotiations take place within your own four walls.” (Of course, there was no admission charge for the session.)
MacKay acknowledged the many stress points faced by distributors, with both vendors and retailers demanding more even as distributors seek to improve their own profit position.
“Unless something dramatically different happens, this will be a very tough world to survive in,” he said. “We all compete fiercely for that retailer’s dollar with a volume at any cost mentality.” That, he said, has got to stop.
MacKay discussed negating principles that work and how to avoid common mistakes that buyers make in tough times. He also discussed how to determine which customers are really worth the effort, and some strategies used by leading consumer product companies.
