5 Fundamentals: My Review

I’m told that there are 613 commandments in the bible, although most of us only know the Top 10. I’m not sure how many sales management fundamentals exist, but a new book provides a valuable service by focusing our attention on the Top 5.

5 Fundamentals for the Wholesale Distribution Sales Manager is a new book by Tim Horan and Steve Deist of Indian River Consulting Group. It is published by the NAW Institute for Distribution Excellence. (The NAW Institute also publishes Facing the Forces of Change®: Lead the Way in the Supply Chain.)

This book should be required reading for all wholesale distribution sales managers, regardless of tenure. The 5 Fundamentals is practical, straightforward, and relevant.

The book is organized around the following fundamentals:

1. Assess and develop your own coaching and management skills
2. Recognize talent and select the right people
3. Manage the sales function successfully and systematically
4. Know how to build a high-performing team
5. Maintain thriving relationships with customers and suppliers.

It’s hard to argue against anything on this list. Few consultants would recommend you build a low-performing team or select the wrong people.

Thus, the authors' main contribution comes from demonstrating how these core principles translate into real-world actions. For instance, the chapter on managing the sales function provides an exceptionally clear description of fact-based account planning.

The book benefits from the many case studies in sales management, which I presume represent disguised experiences from their client base. I chuckled when reading about “Bill,” a senior rep who was nicknamed the “agitator” because he was “…always stirring things up, always making more work for the management team, and always irritating the support staff.” All of the case studies are written using first names, making them great discussion and coaching tools, especially for those of you practicing Fundamental #1.

I also appreciate the authors’ sense of humor, as indicated by the cartoons and hilarious asides sprinkled throughout the book. Horan and Deist can not even resist taking one final shot in the conclusion, arguing that the old days of relative ability (if you were a relative, you had ability) are gone. Doh!

I found the self-assessment exercises, such as the “Core Competency” worksheet in Chapter One, to be very useful and would have liked to see more exercises. A keyword index would also have been useful as I found myself having to search for particular ideas by flipping pages. These are very minor misgivings.

In my opinion, all current and future sales managers should show their commitment to lifelong learning by getting 5 Fundamentals for the Wholesale Distribution Sales Manager.

P.S. If you like this book, I’d also recommend What Got You Here Won't Get You There as a great complement to the Five Fundamentals. This new book identifies “the bad habits that keep highly successful people from succeeding even more.” The Twenty Bad Habits (anti-fundamentals?) are a rogue’s gallery of career limiting behavior. You can see the list in this Knowledge at Wharton review.

Broadband Boom

Chapter Four in Facing the Forces of Change®: Lead the Way in the Supply Chain argues that wholesaler-distributors must fully embrace the Internet in their business operations now that it is a normal part of everyday life in the United States. The newest data make it harder than ever to believe “my customers are different.”

The latest survey by the Pew Internet & American Life Project found 47% of adults – 103 million people – have high-speed internet connections at home as of early March 2007, up five percentage points from a year earlier. You can download the full report for free: Home Broadband Adoption 2007.

The chart on the right shows the time trend from the Pew data over the past 8 years.

I like to go online during my presentations and show the reality of today’s Internet to distribution and manufacturing executives. Online Customer Communities are especially eye-opening. Here is a sample of active forums mentioned in Exhibit 4-6 of Lead the Way in the Supply Chain:

• Contractor Talk -- All trade contractors (electrical, plumbing, etc.)


• Tractor by Net -- Farm and construction equipment users


• Lawnsite -- Lawn care and landscaping professionals


• WeldTalk -- Users of Hobart welding products
  
• JLC Online -- Lumber and drywall contractors


• Maintenance Forums -- Industrial facilities maintenance professionals

If you are new reader to the Distribution Trends blog, check out the posts under the topic Connected Customers. How can any wholesale distribution executive seriously ignore the impact of information transparency on their business?

The Risks of Chinese Sourcing

A few people have emailed recently to ask if I am rethinking private labels and Chinese sourcing in light of recent product quality problems.

My short answer: no. Most of the problems have occurred in food and drugs, although problems in some finished manufactured products have appeared such as the infamous Chinese tire recall. Many people are too quick to throw out overseas sourcing for political reasons. Nonetheless, wholesaler-distributors will have to pay close attention to their sourcing partners or risk future liabilities.

Food, Drugs, and Tires

As I point out in Chapter One of Facing the Forces of Change®: Lead the Way in the Supply Chain, China has emerged as the most important source of imported products for wholesaler-distributors with private labels. Almost 60 percent of wholesaler-distributors with private labels currently source their private label product from an overseas plant. By 2012, more than 80% of these companies expect to be sourcing overseas. (See Exhibit 1-2 ).

At least one distributor’s private label brand got caught up in the recall of tainted toothpaste. According to the New York Times, McKesson, the largest pharmaceutical distributor, recalled its McKesson EverFRESH brand after laboratory tests found small amounts of diethylene glycol.

The Wall Street Journal has a done some nice summary articles on the problems. Two highlights:

• Are Chinese Export Products Unsafe? “In a span of 15 years, China has gone from a country that struggled to feed its population to a major food exporter. … While China has adopted stringent safety regulations, those have been poorly enforced, if at all.”
  
• Safety Becomes a Hot Trade Issue “Safety and quality standards are increasingly replacing tariffs and quotas as focal points for international trade disputes.”

The second article highlights the analytical challenge -- it's difficult to distinguish genuine safety issues from protectionist rhetoric.

Safe Sourcing

For a different point of view, read What's Going on With China Quality (if Anything)? This ex-Ariba blogger quotes one of his former colleagues as saying: “Companies that source raw materials and manufactured goods throughout the globe need to have sound supply chain practices in place to insure that quality levels are maintained.”

The story of Chinese tire importer Foreign Tire Sales shows what happens when you cut corners. (See Made in China: Faulty Tires.) Keep in mind that FTS sold its products to distributors.

Interestingly, Andrew Berlin of Berlin Packaging echoes the value of knowing your foreign suppliers in this recent interview with Modern Distribution Management, which said:

Still, even with the advent of Internet, "nothing beats walking the factory floors and doing the audits and meeting the principals of these organizations. There’s no shortcut for the hard work that goes into finding these factories." Taking the extra time to find reliable factories will mitigate some of your risks. And as with any investment, sourcing from overseas requires the hedging of bets.

You should also read through Andrew’s presentation slides from the NAW Executive Summit for further insights on protecting your business with sound importing practices.