2015 Adhesives and Sealants Industry Distributor Roundtable
What benefits can distributors of raw materials/chemicals offer for adhesives and sealants manufacturers?
Manufacturers of adhesives and sealants face an increasingly complicated world, where innovation is essential to survival and ever-expanding regulations threaten their profitability (and sanity!). In our second annual Distributor Roundtable, distributors of raw materials/chemicals share details regarding their businesses and what they can offer to help adhesives and sealants manufacturers succeed.
What should adhesives and sealants manufacturers understand about raw materials/chemicals distributors?
Ken Schene, Director of Sales, AJ Adhesives, Inc.: Distributors can fulfill the role of supplier to the end user with more face-to-face contact because of the smaller territory sizes that we cover per sales rep, as well as typically shorter turnaround times. Many times, a next-day delivery can help with just-in-time delivery and cutting down on the customer’s inventory.
Roland Chidley, President, The Chidley & Peto Co.: Specialty raw material distributors are an extension of their suppliers. Supported as direct sales representatives, they bring state-of-the-art technical expertise to their customer relationships. Meeting customer expectations and the needs of greater technical support, many specialty distributor sales representatives are former chemists and formulators. Our company, supported by our suppliers, hosts two Industry Technical Seminars each year during which new technologies and products are presented.
Dan Gruber, President of CASE, KODA Distribution Group: We offer technical value, market intelligence, local warehousing (to support just-in-time efforts) and trust (relationships are key). Distributors provide access to products and technical information that might not be directly available for adhesives/sealants manufacturers. This product access and information are vital for the future and growth of their businesses.
Mark E. Reichard, President and CEO, Maroon Group: Maroon Group has embarked on a phase of significant growth and investment. As a national distributor of specialty additives, resins, pigments and packaging, we are investing in our people, infrastructure and technology so we can remain a valued supplier to adhesives and sealants manufacturers.
In the last 12 months, we’ve increased our head count by nearly 20%, focusing on key functional areas to better meet the needs of our customers and suppliers. Our principal partners expect that we will continue to increase our market share; as our organization grows, we need to continually focus on having the right people on our team.
In late 2014, Maroon Group acquired a value-add processor that provides products and services that can improve our customers’ productivity, protect their intellectual property, and allow them to comply with workplace environmental and safety regulations. We are actively pursuing several other acquisitions that will allow us to positively impact our customers’ operations.
We’ve invested in technology to improve our levels of service while reducing costs for our customers. This integrated inventory management, demand planning and forecasting tool has allowed us to get closer to our customers, better plan with our suppliers, and improve our service levels. This investment reaped great benefits for our customers over the last year as we faced considerable logistics challenges due to the protracted contract negotiations at the West Coast ports. Due to this investment, as well as our long-term commitment to our customers, we were able to drastically reduce the supply chain risk that our customers faced and, in most cases, completely insulate them from interruptions.
How can adhesives and sealants manufacturers benefit from partnering with a distributor of raw materials/chemicals?
Schene: There are multiple benefits for a manufacturer to partner with a distributor, including customer retention, more new customers, increased volume, lower cost in relation to sales and new sales, better accounts receivable, and less bad debt, just to mention a few.
Chidley: A specialty chemical distributor’s key value is to support and manage their customers’ inventory requirements. By developing and monitoring line-item forecasts on key products for customers, short lead times and supply are ensured. Regulatory and environmental support is available from the specialty raw material suppliers, as well as membership in industry trade groups such as the National Association of Chemical Distributors and the American Coatings Association.
Gruber: Chemical distributors are the boots on the ground for the adhesives and sealants industry. Our sales representatives are industry focused and technically trained. We deal with real customers’ situation and needs. We are working with innovative, entrepreneurial companies to develop the next big trend or application.
In addition, providing access to new products can help improve the manufacturers’ business outlook. We offer technical support through our Technical Centers, and our ability to bundle less-than-truckload (LTL) products helps save on freight. We also help reduce the complexity of dealing with large manufacturers.
Reichard: Adhesives and sealants manufacturers can benefit from partnering with Maroon Group in many ways. We provide value to our customers via consistent products, delivery, and supply executed by an experienced and focused sales organization. Our customers rely on Maroon Group to reduce costs, increase speed and mitigate their supply chain risk. This integrated distribution model focuses on the seamless collaboration of our organization with our customers’ supply chains to improve their operations.
How will the relationship between adhesives and sealants manufacturers and raw materials/chemicals distributors continue to evolve?
Schene: The relationship between manufacturers and distributors has evolved a lot over the years. Twenty years ago, there were very few distributors in the adhesives industry. Now there are multiple distributors for all of the different adhesive markets, and it will continue to expand as the economy and the market grow because of all of the benefits that distributors bring to the end user.
Chidley: As the consolidation of the CASE industries continues, suppliers will increasingly rely on distribution to penetrate the market to small/medium-sized end users. Conversely, small/medium end users will increasingly rely on distribution for technical support.
Gruber: As the industry continues to evolve and consolidate, manufacturers will increasingly depend on distributors because manufacturers will be spending most of their time on producing product as efficiently and cost effectively as possible, leaving fewer resources available for sales and marketing.
Reichard: We are excited by the opportunity to get closer to our customers via our enhanced product and service offerings and greater geographic reach. As our customers’ demands evolve, we will maintain our flexibility to react quickly. In the near future, we anticipate increasing our North American warehouse network from 11 facilities to 17. With more than 50% of our customers’ orders shipping on a same-day basis, this expanded network will allow us to maintain the levels of service that our customers demand.
As we expand our specialty resins, additives, pigments and packaging product portfolio, we look to bolster our “green” product offerings to help our customers meet evolving environmental regulations. We work closely with our customers to identify where other gaps exist and lean on our principal management team to search out viable solutions, leveraging the global sourcing expertise that we have developed over the last three decades.
To locate the best distributor partner for your needs, see pp. 16-18 of this issue and visit www.adhesivesmag.com/distributordirectory!