INTRODUCTION:
The 5 Fundamental
Concepts
I have conducted hundreds of workshops and worked with thousands of
people, either directly for clients or for trade organizations across the United
States and Canada, and my original belief that the branch manager is the key
to success, which started the thought process to produce 5 Fundamentals for
the Wholesale Distribution Branch Manager, remains solid.
The biggest trend I have noticed relating to the branch business is that the
expectation for branch managers’ performance is higher. The traditional or
classic advancement of a person going from inside sales to outside sales to
branch manager is no longer the assumed track. The branch manager coming
up that track with no business skills has really struggled as companies push
hard for improved performance at the branch level. The other significant
change is that success in the market is moving away from doing business
based on a relationship and toward the distributor offering the best value. I
refer to it as providing the customer value stream.
Regardless of organizational structure, the manager at the market level,
commonly referred to as the branch manager, must possess the fundamental
business and leadership skills to win in this new market landscape. Although
relationships with customers will always play a role, the business that is
best at providing the customer value stream at the market level where the
customer is engaged will emerge as the winner in growing profitable market
share. Expectations for branch managers to have the skills and leadership
techniques to win in this new market landscape will continue to grow.
When I conduct management training directly for clients, I customize
the workshops to support company structure, culture, and management
philosophy, and I reach out to get to know the managers prior to every session.
I have worked with different organizational structures with centralized or
decentralized functional activity and various economic market conditions,
1
INTRODUCTION
geographic footprints, and industry dynamics. Across the board, the common
denominator for winning is the business and leadership skills of the manager
at the market level—the branch manager.
If winning means profitable market share and profitable market share growth,
then developing the branch manager is essential to a company’s success.
I have listened to presentations and read well-written and on-the-mark
articles of several of my contemporaries on what you should be doing to be
successful in today’s business climate. I present in this book and my workshops
how to do it. The how must be done by the branch manager because that is
the person who executes the strategy at the market level.
The wholesale distribution industry has developed more in the last 10
years than it has in my first 26 years in the industry. Fundamental 1, the
“5,000-foot view,” provides a rather different view today. Today, we have
off-shore sourcing by distributors, strong moves by manufacturers to
demand-pull marketing strategy, e-commerce and other nontraditional
channels, direct-to-end-user channels eliminating the distributor, do-ityourself market share gain, and a different portfolio of support services
required by customers.
Wholesale distribution businesses are trying to figure out how to use social
media outlets. The new employees coming into the branch have engaged in
sharing their lives through these media platforms since they were in high
school, but how should a wholesaler-distributor share its life on a media outlet?
Are customers influenced by social media or do they look for information
about buying products on social media? These are questions most managers
are grappling with. However, if the wholesale distribution business has a laser
focus on providing net speed to the customer, the answers on when and how
to use social media will become obvious.
Branch managers in today’s wholesale distribution industry need to know the
5 Fundamentals more than ever and keep the 5,000-foot view of their market
so they can quickly adapt their business to take advantage of opportunities
or prevent losing a customer.
What has driven emerging trends to reality and will continue to shape
our future is the universal demand for speed. Customers demand, expect,
require, move toward, and insist on speed. To gain profitable market share
2
INTRODUCTION
growth (take business away from your competitor) and become a supply
chain partner with the right customers, the business has to have speed in
everything it does.
The concept of speed is the end of the functional equation; it is the net
of customer experience with your business. Speed is not just doing some
things fast. It is doing everything fast with zero mistakes and at a reasonably
competitive price. A business can pump out deliveries within an hour of
receiving the order, but any pick-and-pack mistakes, unexpected back orders,
inaccurate invoices, or wrong delivery locations slow down the net speed.
This applies to every touch point the customer has with your business. You
may have the largest inventory and can ship product to arrive same day or
next day, but if it takes several hours or a day to get an inside salesperson to
provide a quote or return a phone call, your net speed is quite low.
Net speed is what sets apart distributors at the market level. A company’s
business strategy may be to have large inventories at hubs within a
next-day-morning delivery. However, a distributor in the local market who
has far less inventory but the highest level of quality, accuracy in transactions,
and credibility in doing what it promises will beat the other distributor at
growing profitable market share at the right customers because its net speed
is much greater.
The characteristic of structure and business strategy can change, and the result
will be the same. The highest net speed at the market level wins. What does
change within companies with the same overall business strategy and across
similar markets and economic conditions is the business and leadership
skills of the local manager, the branch manager, to create that high level of
net speed in his business. Companies with the same organizational strategies
will have vastly different performance results across the branches. The only
differentiator is the branch manager.
The 5 Fundamentals are the essential elements in business and leadership
skills for managers to create in their businesses the highest net speed in their
markets.
Fundamental 1, the 5,000-foot view, discussed in chapter 1, is very important,
maybe more so than ever before. A pilot flying about a mile above the
3
INTRODUCTION
ground can see all of a major city’s infrastructure and landscape. This view
is quite different when in an airliner at 30,000 feet looking across a large
geography and only seeing the dark patches of numerous cities. That view
provides little to no information about the landscape and structure of the
city. Similarly, a one-dimensional street map of the city provides a minimal
amount of information about the city. The branch managers who stay behind
their desks, listening to what others tell them about the market, and feeling
satisfied about how much market share they think they have are looking at
the one-dimensional street map.
To understand where to apply resources, how to apply resources, and how to
engage the people to provide speed all for profitable share gain, the manager
must develop a passion for market information, but the branch manager still
must be good at branch communication.
Despite the new methods of communicating today, improving communication
in the branch is still a common need expressed by the employees. In chapter 2,
Fundamental 2 shows that people may be very knowledgeable in the industry
and even excellent with customers, but if they have lousy communication
habits in the branch, they will not be able to energize their teams to move
their businesses into the high net speed zone.
As discussed in chapter 3, Fundamental 3, team building and problem
solving, is essential to compete in the high-speed nature of the industry. A
wholesaler-distributor will not be competitive in today’s environment unless
it can provide the tools and motivation for the branch employees to beat its
competitors by providing the highest net speed.
In chapter 4, Fundamental 4 helps to improve the productivity of the outside
salespeople. Like branch managers’, outside salespeople’s success is scalable
from good to bad given the same characteristics of company, markets, and
trade groups. The difference is in the skills of the salesperson and account
package management habits of the manager. This edition includes the
formula for salespeople and branch managers to gain market share, as
explained in more detail in Cracking Accounts. The idea that just building
personal relationships is the key to winning at outside sales is out. Providing
the customer value is in. An outside salesperson who understands customer
value will beat the competitor’s salesperson that relies on his relationship
with the customer for maintaining the business.
4
INTRODUCTION
Fundamental 5, discussed in chapter 5, is the idea of applying the branch
manager’s knowledge of basic financial ratios and concepts in the industry.
Financial reporting processes in the business are drastically faster and better
than they were before everything was automated, but that does not excuse
the branch manager from having knowledge of the wholesale distribution
accounting basics and the ability to apply analysis to financial reports to
understand the behavior of his business. Many companies have minimized
their basic financial training for managers. Employee behavior determines
the data, and data, when thoroughly understood where they come from in
business transactions, will help to explain employee behavior.
If you would like to discuss the Fundamentals in more detail, please contact
me through www.JimAmbroseWorkshops.com.
Now let’s revisit the 5 Fundamentals.
A note about language: Excellence in wholesale distribution is not limited to any
demographic group. There have always been successful women in the industry.
However, to avoid repetitive and sometimes awkward phrasing, the pronoun
“he” is used throughout this book and is considered to be gender neutral in
its uses.
5