Canadian Electrical Wholesaler

 

November 14, 2016

By Murray Chamney

Manufacturers have traditionally done a decent job at measuring the profitability of product groups within their portfolio. They also measure the profitability of their territories and reps. Wholesalers can easily measure the profitability of each product and product group in their array of goods. Over time, manufacturers’ reps have also developed some tools to help them measure the profitability of their selling efforts. The time spent on a manufacturers’ line needs to be measured in order to determine the true value of it. It may surprise some suppliers to know they are being measured this way.

One of the tools used by reps is the “spur of the moment” time analysis. This was developed by rep organizations, and is taught at the Manufacturers’ Representatives Educational Research Foundation (MRERF), at their Certified Professional Manufacturer’s Rep (CPMR) program. The spur of the moment analysis estimates profitability based on the time spent with each manufacturer.

In a rep organization, nearly 80% of costs are in the labour promoting products and services, and the expenses associated with selling. As such, an assumption must be made that the time spent working with each manufacturer should be allocated to the cost of selling it. A rep firm needs to ask its people as to their time allotment for each line represented. In our organization, we circulate a form similar to the form below:

Manufacturer

% of Time

Actual time

Al's Amperes

50%

43.48%

Omar's Ohms

30%

26.09%

Victoria's Voltage

35%

30.43%

Total

115%

100.00%

 

All employees fill in their percentage of time. It need not add to 100%. Employees need not dwell on the details of their time spent. The form should be filled in a few minutes. The formula to bring it to 100% is applied after their results are forwarded. All time sheets are gathered and totalled, to reach a true time spend. Some firms weigh time spent by job classification, to allow for compensation differences.

The total percentage of time spent is multiplied by the total cost of running the business. This can be compared to the total commission income garnered from that manufacturer. This will give a general idea of the profitability of each supplier. A sample is listed below.

Total cost

 

 $ 100,000

 

 

Manufacturer

% of Time

Cost/mfg

Commission

Profit

Al's Amperes

43%

$43,000

$57,000

$14,000

Omar's Ohms

27%

$27,000

$24,000

-$3,000

Victoria's Voltage

30%

$30,000

$35,000

$5,000

Total

100%

$100,000

$116,000

$16,000

 

In this example, more time was spent on Omar’s Ohms than was justified by the commission. It behooves the management of the organization to work towards profitability in all lines. The management is also responsible for ensuring that each manufacturer receives the proper percentage of time, based on the compensation received.

There are many options that the organization may choose to apply in this situation. Some of the actions may include:

·     Do nothing. The line may be a new product or a pioneering venture. These typically take more time to start, and should become profitable in the short run.

·     Do nothing. The line may be a “door opener.” A good example of this is power tools. Tools often require a significant amount of sales time for every transaction, but can often get a rep into a contractor who would not normally give that time to them. The rep can then use the synergy of the call to promote other lines on their line card.

·     Work with the supplier to find ways to cut out some of the time that is not used for selling.

·     Work with the supplier for ways of getting more compensation.

·     Find ways in your organization to optimize the time spent on this line.

·     If the line continues to be unprofitable, and no further options exist to change this, a termination and replacement of the principal could be in order.

This is one tool that can be used to help manage a Rep business. There are many more. The MRERF schedules an annual CPMR course to teach reps this and other methods to help measure their agency’s performance. Information on CPMR is available through CEMRA and NEMRA.

Murray Chamney is President, Intralec Electrical Products, and a member of Electro-Federation Canada’s National Advisory Council.

 

 

OlsonBy Katrina Olson

A recent CEW article by David Gordon caught my eye. The headline was, Are Your Sales and Marketing Teams Inhibiting Growth?

As a marketing consultant, writer, and trainer, I recognized the challenges and barriers that David was writing about. We agree on many issues (and their causes) facing electrical distributors and marketers. But I also hear from marketing people all the time that the C-Suite is hindering their efforts which, in turn, hinders the company’s growth.  

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2018 Electrical North American MeetingOn October 29-31, 2018, the AD Electrical North American Meeting drew over 1,000 attendees. This event attracted 151 first time attendees and representatives from over 362 companies in the United States, Canada and Mexico.

Attendees benefited from a variety of agenda topics, including: Network Meetings, Emerging Leaders Session, and Country-specific Business Meetings. New to this year’s agenda was a SPA Optimization Workshop led by industry veteran Mo Barsema. In addition, members and suppliers also attended a panel discussion on managing and measuring your digital success.

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CEW 6 HR 400People with low levels of coping skills are at higher risk for mental health issues and mental illness than those with high levels. Gaps in coping skills inhibit the ability to solve problems and to make healthy and effective decisions.

To examine how coping skills can predict health outcomes, Dr. Bill Howatt facilitated a doctoral research study that examined the question: “What role does an individual’s coping skills have in predicting psychological and physical health outcomes?” The study found that coping skills mattered and were, in fact, a moderator that partially explains why some individuals had better physical and psychological health outcomes than others. The study concluded that when combining a person’s coping skills with their perceived stress levels, coping skills were significant in predicting which employees were at more or less risk for health issues.

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Changing Scene

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 EFC Announces 2018 Marketing Awards Winners

2018 Marketing Awards WinnersElectro-Federation Canada (EFC)’s Marketing Awards program recognizes member organizations that demonstrate marketing excellence and innovation within the Canadian electrical manufacturing and distribution industry. Winners of this year’s awards were recognized at EFC’s 8th Annual Future Forum, held earlier this month. (Shown in photo: EFC President and CEO Carole McGlogan with representatives from Bartle & Gibson, winners of the Integrated Marketing Award — distributor under $50 million.)Electro-Federation Canada (EFC)’s Marketing Awards program recognizes member organizations that demonstrate marketing excellence...

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CEW 6 ShowReport 400Leaders and innovators from business, government and the education sector gathered for this ABB premier collaboration event. More than 11,000 delegates attended the bi-annual ABB Customer World Houston 2019 from March 4 to 7 in Houston, Texas. ABB’s latest pioneering technologies were displayed over 150,000 sq ft of a colourful, buzzy display of futuristic conveyor belts and robots, an ABB Formula E Generation 2 car, and much more groundbreaking technology. ACW attendees also took part in keynote sessions and seminars focused on realizing the tremendous productivity and performance improvements that digitalization delivers for companies of any size and from any industry.

In his keynote address at the event, ABB CEO Ulrich Spiesshofer explained how ABB was shaping its business for leadership in digital industries to support its customers in a time of unprecedented technological change and digitalization. He was joined by Hewlett Packard Enterprise CEO Antonio Neri. 

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Changing Scene: 

Cree logo 2 400Cree, Inc. has signed an agreement to sell its Lighting Products business unit, which includes the LED lighting fixtures, lamps and corporate lighting solutions business for commercial, industrial and consumer applications, to Ideal Industries, Inc. for approximately US$310 million before tax impacts, including up-front and contingent consideration and the assumption of certain liabilities. Cree expects to receive an initial cash payment of US$225 million, subject to purchase price adjustments, and has the potential to receive a targeted earn-out payment of approximately US$85 million based on an adjusted EBITDA metric for Cree Lighting over a 12-month period beginning two years after the transaction closes.

The agreement continues Cree’s strategy, announced in February 2018, to create a more focused, powerhouse semiconductor company, providing growth capital for Wolfspeed, its core Power and RF business, and equips Cree with additional resources to expand its semiconductor operations. The deal also enables Cree Lighting to gain additional global focus, channel support and investment as it becomes a growth engine for the IDEAL team.

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Peers & Profiles

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 Young Leaders: Taylor Gerrie

Taylor GerrieOn a regular basis, our publications profile members of our industry through their responses to a Q&A. It’s a way of recognizing industry movers and shakers, and helping our readers get to know them better. 

Recently we launched an initiative with Electro-Federation Canada's Young Professionals Network to include profiles of up-and-coming leaders. We provided the list of questions below to Taylor Gerrie, Automation Account Specialist at Gerrie Electric Wholesale Ltd. in Burlington, Ontario. Here are Taylor’s responses.

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Susan Uthayakumar, President of Schneider Electric Canada: Driving Success

Susan UthayakumarBy Owen Hurst

First and foremost, sitting down with Susan Uthayakumar feels more like sitting down and conversing with a friend than conducting an interview with the Canadian president of one of the world’s largest electrical manufacturers. Of course, she exudes the confidence and knowledge her position demands, but equally identifiable are an open and engaging nature.

In a recent sit-down, we learned a little about Susan’s history and what drives her to succeed.

To begin, Susan was born in Sri Lanka and immigrated to Canada at a young age. She went to high school in Canada and attended the University of Waterloo where she earned undergraduate and graduate degrees.

Upon completing university Susan began her working career with Deloitte, which she describes as a great starting point as she was surrounded by highly driven and intelligent individuals. She welcomed being in a position that was demanding and helped nurture a strong work ethic. Her work with Deloitte also instilled a great interest in acquisitions, which would serve her well as her career unfolded.

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CEW 3 Perspective 400

We often learn how to look forward by first looking back, or at the very least we realize that despite our best efforts we have not truly advanced quite so much as we had thought. Sure, technology is rapidly advancing. That’s beyond question. But what about our approach to selling it? Have we changed that much in the last 20, 40, 60 years? Inevitably there have been advances and changes in marketing, the Internet causing the biggest shift, but many of the concerns and directives that have driven the distribution and marketing of industrial electrical products remain, or at least planted the roots of the concerns of manufacturers and distributors today. 

To gain perspective of the perceptions and directions of electrical product distribution in 1960, we turn to Edwin H. Lewis. In 1960 Lewis published “The Distribution of Industrial Electrical Products” in the Journal of Marketing.

To fully define electrical product distribution in 1960, Lewis broke his study into several categories. We will follow his direction and provide his insights on the industry in each of the categories he identified.

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Looking Back

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Looking BackThe best memory I keep from CEDA is the way that they accepted me when I came into the business. The welcome they gave to me, all of them men. (In those days there were not many women in business.) This welcome I will always remember. CEDA has played a very important role in my success.

One year our conference was in Hamilton, Ontario. Mr. Caouillette, our speaker, got lost and instead of going to Hamilton went to Toronto. I think that that was the longest cocktail hour that CEDA ever had… waiting for him to arrive. Certainly that night the head table and everyone were in good spirits.

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Looking BackLooking BackIn the 1930s to 1940s, CEDA’s Western Canada membership was very stable with old line independent companies like Horsman, Ashdowns, Brettell, Marshall Wells, Electrical Supplies Ltd., etc.

Small electrical distributors just were not acceptable for membership as they did not carry the main-line manufacturers’ goods, publish a wiring device catalogue, or employ four to five salesmen as CEDA requested.

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