The Mheda Journal

I read an interesting article today in Entrepreneur magazine. It discussed how brands like Rolls-Royce and Starbucks are able to get away with charging a premium for products that consumers can easily get cheaper somewhere else. You may remember that Brian Grubb of The Ritz-Carlton spoke about this at Convention as well.

“The association between your product and the price you’ve assigned it most likely is not fixed in your consumers’ minds the way it might be in yours,” the article states. “Business owners can and should think creatively when it comes to pricing their products and experiment with various price points that are different than what they initially think they can charge.”

How can a business owner tap into that? The article makes three suggestions—targeting affluent customers, becoming a leader in your field and upgrading your venue. I can’t figure out how the first and third ones are all that applicable to material handling (if I’m wrong, let me know!), but number two is more relevant. “A seller’s reputation, financial stability and leadership position in its market are more valuable as competitive assets than they were several years ago. As a business owner, your goal should be to make your company the go-to authority in your industry or area,” the article states.

This goes  beyond pricing directly to two things that MHEDA members talk about all the time—adding value and touting the benefits of MHEDA membership. Participation in an association like MHEDA can help make a distributor stand out as a respected leader in the field. How do you promote your MHEDA membership to your customers?

As I mentioned a few days ago, we are doing a feature on mentoring in the next issue of The MHEDA Journal.

I had an interesting conversation earlier this week with Stephen Raymond, president of Raymond Handling Concepts Corp. (Fremont, CA), who told me about the development of the Raymond Academy, a management development program he and his staff came up with in 2008 and implemented in 2009. It’s a pretty involved process, as about a dozen employees from across the different branch locations spend an entire year reading books, taking personality and leadership tests, and talking with a mentor on the RHS management team—in general, learning how to be a leader.

Prior to the Raymond Academy, Steve Raymond said he had a “Poof, Now You’re A Manager” program. “We chose them based on experience and a sense that we had that this person had leadership potential. But we didn’t have any development training that we put them through. It was just ‘Poof, you’re a manager and we’ll try to help you any way we can.’ They would either figure it out or they wouldn’t,” he says. 

It strikes me that the “Poof!” methodology is probably more common than a formalized training program. Training is important for employee development, but how much training do you actually give your employees? Do you just throw them to the wolves? Give them a handbook of what to do? Product training is part of it, but there’s more to it than that. How do you teach people how to fit in at your company? Look for the Third Quarter issue of The MHEDA Journal for some suggestions, or leave your own in the comments section below.

For the Third Quarter issue of The MHEDA Journal, we’re doing a feature we’re calling “Mentoring Success Stories,” so I’m talking to some MHEDA members about their training practices and mentoring processes. When I typically think of mentoring, I think of how it’s a good way to help a inexperienced person get to know the industry and the benefits that that person can gain from being exposed to a more experienced person who’s seen everything there is to see in the industry. The new person learns how to handle certain situations and all the different elements of the job.

But I think there’s another aspect of mentoring that too often gets overlooked. And that is, how the experienced person can find just as much value from the relationship. I spoke with Pam Jones at Flight Systems Industrial Products, who has developed a couple of different mentoring programs at her company. She’s in the process of completing a one-on-one mentoring program with a young employee, and the mentee has learned the industry and Jones has gotten something from it too. “The industry is starting to get to know her, and every time I hear them call to talk to her, I know they trust her. They’re comfortable talking to her. It makes me feel like I’ve accomplished something,” she said.

That’s a great point. The experience and knowledge transfer can be just as important to the mentor as they are to the mentee. And that doesn’t even touch on the new skills and procedures that an outside person can bring to the company and can teach to the mentor. So the benefits of mentoring are clearly a two-way street.

Obviously, it’s a huge time commitment, but I think it can be a mutually beneficial relationship and a good way to engage young employees. What do you think? How can a mentoring program work in material handling?

I read an article today that outlined the ways that rising cost of gasoline, once again, is wreaking havoc on small business. This seems to be an issue that comes up about this time every year, but it’s still a very real concern. According to NFIB SmartBrief, “Higher gas prices are forcing consumers to make sacrifices, cutting back on other purchases or delaying big-ticket buying, which is cutting sales for retailers and other sellers.” As NFIB Chief Economist William Dunkelberg says, “If all your customers are paying $50 for a tank of gas that they used to pay $25 for, somebody is not getting that $25.” About 64% of small-business owners say revenue is down because of higher gas prices, and 25% say they may have to lay off workers, according to a survey by wholesale distributor DollarDays.com.

With gas prices hovering around $4 a gallon in much of the country and some pundits saying they’re not at their peak yet (though most people say the prices will drop a bit from here), I can imagine this being a legitimate concern. As recently as December, fuel prices were as “low” as $3. Read what some members had to say at the time. Now, it’s even worse. How are members handling it? What, if anything, can be done? How are gas prices influencing business decisions. I’d love to hear what you all have to say!

I had the opportunity to speak with a different kind of MHEDA distributor this week, at least different than what I’m used to. I spoke to Vince Sullivan, president of Southern Acquisitions in Dallas, Texas, a distributor of loading dock equipment and overhead doors. No forklifts, no conveyors, no racking. Just dock and doors. It’s a fascinating company, with 10 locations spread from Texas to New York. There’ll be more explanation in The MHEDA Journal’s third quarter issue, but I wanted to talk about one thing in particular that Mr. Sullivan mentioned. It goes along with the whole theme of customer service that MHEDA is focusing on at its Convention next week. (Only 3 days away…how’d that happen?!)

“Every week, we say to our people: ‘I didn’t see too many people lining up on our doorstep today to give us a lot of orders, so I guess that means we have to go out and hustle to find them.’” What a great way to motivate people. If customers aren’t coming to you, then you need to go find them and serve them the best you can.

During the downturn, one thing MHEDA members talked a lot about was how it was a wake-up call to a lot of poor tactics and gave them a chance to streamline their operations. But the question, they said at the time, was how long it would take to revert to bad habits when things picked up again. It’s easy to be diligent when times are rough, but if sales are coming more easily, it’s hard to motivate yourself to do the little things. However, with motivational tools like the one above, at least one MHEDA distributor is fighting to make sure those bad habits don’t creep back in.

What are some other ways to ensure good habits? I realize that many of us aren’t yet back to what can be termed “good times” just yet, but if we don’t pay attention to the little things now, they’ll be harder to correct later. So, what do you think?

In celebration of Earth Day later this week, let me return to one of my favorite topics: green business. Often in this space, I’ve written about the philosophy of going green as a business. I’ve summed up the debate about whether going green is a viable business model or a marketing ploy, so I won’t rehash it here. But I came across an article today called “The Many Payoffs of Green Business.” It’s a few months old at this point, but I thought it made some interesting points.

The author, who works for a energy-efficiency nonprofit group (not the most unbiased source, I’ll grant you), makes the case as to why sustainability is the way to go. “The straightforward financial return on investment of sustainability measures is only part of the reason businesses should be committed to reducing their environmental footprints today. There are a host of compelling long-term benefits that businesses reap once they embark on sustainability initiatives—and many of these benefits are ones they often didn’t initially bank on,” she writes.

Here’s the list of her four “fringe benefits” of green business:

• Opportunities for great publicity.
• Better employee engagement.
• Healthier, more comfortable workplaces.
• Time saved in the long run.

You can click the link above to read the explanations for yourself if you want, but it seems like common sense. So, I’m curious what the flip side of the argument is. What are the best reasons for a business to “remain ungreen,” to use a phrase I just made up? I assume cost is one…after all, changes in any business cost money and time in training and implementation, so keeping the status quo would save money, at least in the short-term. But is there more to it than that? Espeially in material handling, with the push toward more energy-efficient trucks, chargers, batteries, conveyors and everything else, I think it’s a compelling question. What are some other legitimate reasons? Let me know what you think by leaving a comment below.

A few weeks ago, I posted a discussion topic in MHEDA’s LinkedIn group asking group members to tell me some of the reasons that customers keep them awake at night. A bit of a tongue-in-cheek phrasing, sure, but it was meant to coincide with the Second Quarter issue of The MHEDA Journal, all about customers and customer-related issues, which itself coincides with MHEDA’s Annual Convention.

Group members responded with some interesting perspectives. Reasons for losing sleep provided by the group included concerns about communication, finances, bidding procedures, service issues and more. One member responded simply, “Customers don’t listen.” Often, this is probably true, but what are some specific scenarios that cause problems?

Financial capability was an important issue. As one respondent noted, “When a major account experiences financial difficulties – our risk increases.” Another person added to that, saying, “Things could be sailing along fine, and then suddenly your customer loses a large account and they no longer need half the service you’re providing, and perhaps half the equipment, yet your business planning counts on this. I don’t own a multi-million dollar dealership with dozens of employees counting on my guidance, but I managed high enough in the corporate ranks to witness it and actually feel it in meetings. So I guess my final answer as to what keeps distributors awake is ‘the unknown.’”

But is it always the customer’s fault? Another unique viewpoint came from the member who wrote, “I believe that if you are staying awake at night because of an unhappy customer it is due to the fact that you did not present a clear explanation of the products, services, etc. being provided. You’ve assumed they thought it wasn’t included and they assumed it was, you need to take the time to present a complete scope of supply and not make any assumptions.”

These are only a few of the most compelling replies. I encourage you to take a look at the responses and chime in yourself. Here’s the link (you’ll need to be a member of the group to access it). I’d love to hear some more perspectives!

Earlier this week, a couple of my colleagues and I made a visit to the site of one of our business partners. I don’t know how many of you are aware of how the process works here at Data Key Communications: We produce all the content that you read in The MHEDA Journal, The MHEDA Journal Online, The MHEDA Connection and wikiMHEDA, then the tasks of printing, binding and shipping for the quarterly print magazine gets outsourced to a local vendor.

We took a trip to see some new advanced technology that they use to print our materials. It was a fascinating trip, and while I was there I was reminded of something that Chuck Waddle, vice president of business development at Hytrol Conveyor Company, wrote for the upcoming issue of The MHEDA Journal. In an article about manufacturer-distributor partnerships, he says, “Visits to the facility are good opportunities for integration partners and customers to see examples of manufacturing capabilities and metrics, ranging anywhere from design and production to delivery and service.” While I intuitively knew this was a valid point, it really hit home for me as we wandered the press room. It’s particularly interesting, I think, because our relationship with our printer is not the typical manufacturer-distributor relationship of which Waddle wrote. Site visits can be helpful in a broad array of situations for multiple reasons.

For employees at a firm, visiting a vendor (or customer) site is a good way to learn more about how their job fits into the big picture of the finished product. It helps to know more about the often faceless names at the other end of a phone line. It helps to see how things work beyond the scope of one’s own desk. For employees of the hosting firm, the same benefits apply, and it fosters a sense of camaraderie with your own staff and the visiting company.

While I understand travel budgets are limited, it can be beneficial for employees to get out and see “beyond the cube,” for lack of a better term. Leave me a comment and let me know your best story about a field trip to a vendor or customer site.

I was going through some built-up e-mail today when I came across my New York Times e-newsletter from Friday. Nevermind that I’m likely going to have to pay for it if I want to continue to receive it each day, this one contained an interesting editorial. Since the Supreme Court ruled in 1992 that retailers could be required to collect sales tax only in states where they had some physical presence, many businesses, particularly online retailers like Amazon.com, have not charged sales tax to consumers. Not only does this lower out-of-pocket cost for customers, it also keeps the states and municipalities in which it does business from collecting tax revenue. The point of the article is that in times when many states are in fiscal disarray, this rule makes no sense.

I tend to agree with that, but that’s not the issue I want to focus on. What got me thinking was that this rule, which I was unaware of, seems to put small businesses at a clear disadvantage. Most small businesses, including most MHEDA members, don’t have a physical presence in more than one state. That means that they are required to charge sales tax in their state, which online competitors based somewhere else wouldn’t have to do. Even if the small business in question transacted the sale over a website or e-store, it still would have a harder time competing with an out-of-state online competitor on price  because of its physical location tax requirement.

In this day and age when businesses are doing more search engine optimization to get their websites and businesses noticed outside their traditional geographic footprint, this is an issue that is often being overlooked. The Times article in question mentions several lawsuits in play regarding this rule. Several states have passed laws requiring sales tax be collected, so this situation will certainly come to a head soon. What do you think? Is this an issue that should be talked about more often? What does it mean for distributors going forward?

The Second Quarter issue of The MHEDA Journal will be distributed at MHEDA’s Annual Convention, which, as you are probably aware by now, is themed “The Customer Convention.” To tie in with that theme, the magazine is chock-full of articles about different facets of the distributor-customer relationship in material handling. Part of that series of articles covers customer surveys and ways to use them effectively.

As it turns out, I was thumbing through a back issue of Inc. magazine the other day and ran across an article called “How to Write A Customer Survey,” which, not surprisingly, gave tips on how to effectively create a customer survey. According to the article, common goals of surveys include measuring customer loyalty, helping human resources departments train staff, new product development, determining the direction for new financing or gauging customer service effectiveness. The first step to create an effective survey, obviously, is to know which of these goals-or a different one-that you want to achieve.

Once that’s determined, it’s important to craft questions so that people will want to answer them. It seems intuitive, but it’s harder than it seems. Asking ambiguous or “double-barrel” questions such as “how easy or timely an experience was” makes it too hard for the customer to answer. It may have been timely but not easy, for example. At the same time, make the questions hard-hitting and valuable so that you’re getting usable, measurable information in return.

The article goes on to outline how to choose the best format, improve the response rate and interpret the results. All of these topics will be covered with specific reference to material handling in the April 2011 issue of The MHEDA Journal in a few weeks. Perspectives come from a manufacturer and two distributors who conduct surveys of their customers. Hope you’ll take the time to check it out!