Volume 45, Issue 7 - September  2006

Distribution Channels

Survival of the Fittest
Associating with the Survivors
by Allen Dyer

A core function of management is to generate and implement good ideas that can help the organization make progress. In my case, those good ideas rarely originate from within. They are usually the result of interaction with others who have succeeded with similar initiatives. I find it much easier to implement a new initiative if I have first had an opportunity to see the positive result of someone else’s similar effort. Maybe I’ll even add a twist that has a chance to improve upon another’s original idea. And, maybe I’ll avoid wasted effort by choosing not to pursue an idea described by someone who experienced its negative result. Either way, the ideas flow with more power when conveyed by those who have the credibility of having been successful. 

From the Top

One of the better opportunities to get good ideas by associating with successful millwork businesses is at the AMD’s Top Management Conference. At that event in Phoenix earlier this year, I thought I saw signs of a more optimistic outlook of the millwork industry in general, in spite of the fact that we’re facing a housing industry slowdown. This is in contradiction to past years, when continual news of consolidation, offshoring, high-tech electronic commerce, and supply-chain disintermediation seemed, at times, to throw most of us off-balance. As I pondered the circumstances that brought more optimism to this group, I reasoned that it couldn’t be that the pace of change has slowed; because, if anything, it has quickened. Perhaps there are fewer unknowns in the competitive equation than in recent years. 

Although they can still be just as threatening, the trends are clearer now. We know more about the impact of the big-box retailers on our industry. We can see that the largest builders are attempting to follow with their own twist on a similar supply chain model. We’ve digested the reality of originating many of our products offshore. Yes, I reasoned to myself, the air of optimism, and even of success, could be the result of actually seeing and knowing more about these challenges, instead of fearing those things we can’t see and don’t fully understand. 

At any rate, I believe my ability to study and absorb industry trends is greatly enhanced by interacting with those businesses that have found ways to overcome these challenges. During the last decade we’ve lost colleagues, including grand old names from our industry—companies and individuals alike—to these changes. Simply said, those who didn’t embrace change are no longer among us. 

Today’s successful millwork companies have endured an industry shakeout that has witnessed the demise of numerous millwork manufacturers and distributors. They have adapted. I believe most of them have driven changes within their companies and industry that indicate progressive millwork companies can be just as successful in the next generation as they were in the past, and I believe it is from this group of successful millwork companies that many good ideas originate. 

Learn to Adapt

If I’m correct, just what does this say about the survivors? It doesn’t mean we’re immune to future threats, but I believe it is solid evidence that we are learning to adapt to ongoing supply-chain transformations not seen in generations past. We know that the changes will continue, but we now have more experience to deal with them. We’ve seen what happened to those who didn’t move forward. We’ve tried, failed, and ultimately learned from poor strategies that weren’t based on sound fundamentals, and we’ve witnessed the success of proactive efforts designed to address the new realities of our industry. All these things—the witnessing of others’ failures as well as the successes of those who made good decisions and implemented them with urgency—make us stronger. We have learned, and continue to learn, from each other.

It is in the providing of opportunities to interact with this group of survivors that I see as an important function of the AMD. As opposed to the more traditional NSDJA of years past that was composed mostly of member companies exhibiting great similarity of business functions and models, we now enjoy interaction with successful companies of much more diversity.
 Therein lies greater opportunity to glean ideas we might otherwise miss. Today’s AMD includes successful companies that have managed to incorporate various combinations of supply-chain functions in innovative ways that best address the needs of their respective business partners. 

The AMD is playing a part in helping its members acquire the skills needed to succeed in tomorrow’s marketplace. The pervasive defensive posture of distributors in past years sometimes attempted to use the AMD as the policeman of traditional supply-chain structures with the ironic result of weakening the distribution function by shielding it from open market forces. The successful distributors today recognize that they can efficiently perform supply-chain functions that are as valuable as those performed by manufacturers and retailers. The AMD is helping successful companies recognize that a focus on supply-chain functions is more useful than a battle over who performs them. 

What more important function could the AMD perform than to provide an industry forum and gathering place for interacting with and learning from the successful companies of the millwork industry? Those who still regard the AMD in the paradigm of the last century might be missing opportunity for constructive interaction with manufacturers and distributors having a much more diverse, progressive, and yes, more successful, point of view than in the past. Maybe there is something to the idea that one can be more successful by associating with others who are successful!

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