Well, the Y2K year has come and gone, without any man-made disasters, and as we enter the real new millennium (centuries start with years ending in 1 - not 0), the state of our industry looks much different than projected a year ago. First of all the term "disintermediation" has come and gone - it meant the end of the distributor - that term, which struck fear into the hearts of distributors, was supposed to witness the customer logging on to the internet and get whatever they wanted in a completely transparent environment - to wit: why do I need a distributor if I have a keyboard and a Web browser on my desk? A lot of "experts", including this one, warned of a bleak future for distributors who did not spend money fast to get on board, or be left behind.
As we look back on the past year (remember the dog year concept), it appears that the outcome was unforeseen - lets chalk it up to the education process and be thankful most of us waited and watched - this writer actually advised that - so the expert label may still be valid.
Where are we now - well, there are only a few websites engaging in e-commerce for plastic "shapes" (read sheet, rod, tube, film) and their impact has been minimal – however, there are some looming giants who may combine the best of the brick and mortar with the click and mortar. For this we have to watch the new GE Plastics combination of Cadillac and Commercial. Their e-commerce initiatives have yet to be perceived at this writing. However, the words coming from GE corporate, with Jack Welch (and soon his successor Jeff Immelt -also spawned from Plastics) saying: "the dotcoms may get the publicity good and bad, but companies such as GE will reap the profits. The Internet was made for big companies - the dotcoms understand buying and selling, but the real efficiencies come in that middle part of the equation: making things."
The Web, as an easy to use interface for the Internet has opened large swaths of uncharted territory for industrial America. Through Web-based buying groups, through auctions and reverse auctions, and various e-marketplaces, companies are saving millions of dollars in the procurement of materials and services. Is your company participating in this?
The Web is changing the sell side too. With well-designed home pages, companies can pitch their products at businesses too small to warrant a sales call or too far from the nearest distributor. A good example of this is www.modernplastics.com. Is your company on-line? This is especially important for the fabricator/distributor.
Another emerging model is Competitive Partnering - best accomplished in markets where minority share distributors and/or fabricators need to improve their costs and overall competitiveness but don't really want to sell their distributorship or invest the money required to purchase their competitor. A viable option is for the competitors to remain independent but at the same time share the use of certain non-strategic resources, such as warehousing, delivery, purchasing, etc. The times are going to demand this, especially in the light of the GE Plastics move to begin in the distribution/fabrication business with annual sales of $750 million (their sales starting point with the assimilation of Commercial into Cadillac).
Happy New Year and Millennium!
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