Distributors are adjusting by using Web services to build closer ties with suppliers and customers and to increase the accuracy of customer forecasts. Better forecasts let distributors align stock levels with their customers' needs, leading to faster inventory turns and lower costs. The catch is that "everybody would agree customer forecasts are bad," Strausl says.
At Arrow Electronics Inc., a distributor of electronics components, the typical customer forecast is off by an average of 50%, says Paul Katz, VP of digital supply-chain solutions. That doesn't matter for parts with a large customer base--Arrow can do its own forecasting for them. But specialized items often have only a handful of customers. Getting those few to forecast accurately is critical to the distributor's ability to match inventory to demand, Katz says.
Arrow has built a system, e-Compass, that applies business rules to customer forecasts. The rules test the accuracy of a forecast by matching it against recent orders and shipments and Arrow's knowledge of a customer's business. Working with customers that persistently forecast inaccurately is now part of managing the overall distribution business, Strausl says.
Stock Building Supply, a $2.7 billion building-supply distributor with 240 wholesale outlets in 26 states, is implementing an enterprise-resource-planning and distribution system from Trend Technologies LLC across all its wholesale outlets. The new system, which for the first time offers a companywide view of customer orders, lets the distributor ship orders from the outlet closest to a customer's building site, regardless of where the order was placed, says Michael Brooks, VP of information systems and technology. Brooks says the system should reduce inventory by 20% or more.
| INDUSTRY LEADERS | ||||
| Rank | Company | Revenue in millions | Income (loss) in millions |
IT employees |
| 62 | W.W. Grainger Inc. | $4,644 | $212 | 500 |
| 66 | Applied Industrial Technologies Inc. | $1,447 | $3 | 90 |
| 78 | Tech Data Corp. | $15,700 | $200 | 490 |
| 95 | Arrow Electronics Inc. | $7,390 | ($610) | 600 |
| 96 | Genuine Parts Co. | $8,259 | ($28) | 800 |
| 116 | Motion Industries | $2,248 | -- | 111 |
| 142 | Corporate Express Inc. | $5,000 | -- | 310 |
| 153 | Rexel Inc. | $2,484 | -- | 104 |
| 166 | TruServ Corp. | -- | -- | 27 |
| 169 | Systemax | $1,552 | ($59) | 250 |
| 171 | Handleman Co. | $1,348 | $28 | 146 |
| 181 | United Stationers Inc. | $3,702 | $60 | 255 |
| 207 | Purity Wholesale Grocers Inc. | $1,600 | -- | 11 |
| 262 | Airgas Inc. | $1,787 | $68 | 110 |
| 274 | CellStar Corp. | $2,200 | ($30) | 130 |
| 296 | Anixter Inc. | $2,520 | $43 | 230 |
| 304 | Henry Schein Inc. | $2,825 | $117 | 200 |
| 328 | Stock Building Supply | $2,670 | $136 | 105 |
| 334 | Avnet Inc. | $8,920 | ($3) | 586 |
| 350 | Graybar Electric | -- | -- | 146 |
| 430 | Growmark Inc. | $1,242 | -- | 52 |
| 461 | Ferguson Enterprises Inc. | $5,000 | -- | 308 |
| 465 | Ingram Micro Inc. | $22,459 | ($275) | -- |
| 471 | Dot Foods Inc. | -- | -- | -- |
| Financial data is from
public sources and company supplied. Revenue is for latest fiscal year. Employee data is from InformationWeek 500 qualifying survey. |
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