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Industry Trends

Industry consolidation, shrinking margins, outsourcing, globalization, China and ever-demanding customers — these are just some of the business concerns. Excelling in wholesale distribution today requires keeping costs in line, minimizing inventory while satisfying customers, having the right product and providing the service that your customers expect. It also means staying current with industry trends that impact your industry. One key to success for distributors is to be able to constantly monitor the environment and be aware of the market situation. FedEx helps by providing key information and resources to information that can affect your business. Industry Consolidation
After a pause in the number and size of acquisitions, M&A is up in 2005 and shows no signs of slowing down in 2006. Financial and strategic buyers are increasing their activities in many industries including industrial and electrical. The results are financially stronger distributors with solid management, good systems, well thought out and defensible market positions and strategies, and good cash flows and prospects.

This trend is expected to continue in future years as both the economy and economics of distribution will drive toward achieving greater efficiencies.

Outsourcing, Strategic Sourcing; China
According to a recent supply chain study by a leading management consulting firm, in 2003, 30 percent of goods consumed in one country are manufactured in another. This means that 30 percent of goods consumed in the U.S. are made outside of the U.S. However, the study went on to predict that the figure is estimated to increase to 80 percent within the next 20 years.

Many distributors are contributing to this increase by having products private-labeled overseas, mainly in China and other Asian countries. Other distributors prefer to maintain traditional roles, but are seeing their suppliers outsource more of their manufacturing facilities to low labor-cost countries. In any case, distributors are squarely in the middle of this issue and need to figure out how to respond.

FedEx is active in China and in almost every country around the world. So we are current on news and information that can impact your business. FedEx is here to help you or your supplier to import your products from offshore, and once in the U.S., we have a range of shipping services that can help get your products to your DCs — or direct to your customers — faster.


Increasing Productivity
Doing more with less is what distributors are focused on, daily. According to one distribution industry expert, distributors have accounted for 25 percent of productivity improvement in the U.S. economy over the past few years. Productivity is measured in multiple ways for distributors: personal productivity (i.e., gross margin per number of personnel), warehouse productivity (i.e., number of orders per labor hour) and inventory productivity (i.e., inventory to sales ratio).  All three are good measures and combine to give a great idea of the “productive” health of the distributor.

However, it's not enough as distributors must strive to continue to improve. This involves making sure that your shipping strategy is aligned with your business strategy and that your people, processes and assets are all working together and as hard as you are.

FedEx has the tools, people and knowledge to help distributors improve their productivity. These include our leading-edge systems and automation that help you look into your supply chain and locate your shipment or our world-class reliable delivery that helps you sleep at night.


Information Technology
Information technology has played a big role in improving the position and cost structure of distributors. But technology should do more than just help improve productivity, it should help distributors collaborate with their supply chain partners. Because of this, IT will continue to be at the center of distributors' strategies and business plans.

FedEx Web-based solutions integrate into most ERP, TMS and WMS packages, which will help you reach the improvement levels you are looking for.


Understanding Total Costs
Leading distributors know that their value proposition in the supply chain is to get the right product to the right customer at the right time and for the right cost. They know that by virtue of their position in the supply chain that they serve customers and suppliers, and that they must continue to focus on providing customer service cost-effectively. It is especially difficult for global products where lead times are longer.

This process requires an analysis of transportation service choices that meet the distributor's business and supply chain objectives. Evaluating air, ocean and ground shipment services and their full logistics are becoming more important to making sound logistics, supply chain and transportation decisions.


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Industry Programs & Events

FedEx is an active supporter and participant in the electrical and industrial distribution industry. We frequently provide educational programs and participate in a variety of industry events. Look for upcoming activities in your area.
Industry Associations

Industrial Supply Association (ISA)

FedEx has teamed up with ISA to offer ISA members discounts of up to 22 percent on selected FedEx Express® shipping services and up to 20 percent on selected FedEx Ground® shipping services. Click here to learn more about the program.

National Association of Wholesaler-Distributors (NAW)
Specialty Equipment Market Association (SEMA)
Motor Equipment Manufacturers Association (MEMA)
National Association of Electrical Distributors (NAED)


Trade Publications

Automotive News
Electronic Business
The Electrical Distributor
Modern Distribution Management
Industrial Distribution
Progressive Distributor
Purchasing Magazine