Issue link: https://www.e-digitaleditions.com/i/51756
The President's Message A Crisis of Profitability… the Sequel I Jim Hanson, President Best Restaurant Equipment & Design, Inc. jhanson@bestrestaurant.com n one form or another,many dealers have expressed lingering concerns over the chipping away of dealer profits. In the May/June 2008 issue of News &Views, I once again sounded the alarm in an article called "A Crisis of Profitability:A Race to the Bottom."The point being to promote profitable dis- tribution practices all the way up and down the supply chain. "Our industry is facing a crisis of profitability," I wrote. "There is no free lunch and the services associated with distribu- tion and the knowledge and expertise behind it are not free either. To give themaway is to enter the race to the bottom of the profit barrel…. "Our industry needs ing and confidential rebate information really protectionism, or is it the realiza- tion that there are legitimate costs asso- ciated with the function of distribution, which the foodservice operator and manufacturer need? (The last of which was prompted by a conversation with a manufacturer friend.) some common sense and respect between manu- facturers and dealers that translate into distribution practices and policies that will make the market healthier, more profitable and will benefit everyone in the channel. An industry based on a race to the lowest price offering, limited knowledge and little or no services will serve no one's interests for very long." Then, I questioned the path to pros- "Our industry needs some common sense and respect between manufacturers and dealers that translate into distribution practices and policies that will make the market healthier, more profitable and will benefit everyone in the channel." AnotherTry at the Questions More than three years have passed and we're still trying to figure out how to stop this prof- itability slide. So I am pretty sure I wasn't ask- ing the right questions. As a matter of fact, as I review the questions, I can see that they were more like stating the problem and then asking the manufacturer to stop doing this or that. Unfortunately, simply articulating our problems did not take us to the prom- ised land of profitability. According to distribution expert perity using a quote from former FEDA convention speaker Herman Cain. In order to be successful,he said,"We need tomake surewe'reworking on the right problem." And to do that, "we need to ask the right questions." So I posed a fewquestions ofmy own. Who's to blame for the current state of affairs?What role does Internet pricing play?What's the cost to the value-added dealer? In the case of end-user pricing and rebate erosion, is asking manufac- turers not to divulge trade secrets, pric- 4 FEDA News & Views Michael Workman, the right way to accomplish real"positive"change in dis- tribution is to collaborate or partner with ourmanufacturers. In otherwords, you scratchmy back and I scratch yours. What is it that we want vendors to do (or not do) and what is it that we deal- ers arewilling to do (or not do) to recip- rocate. The concept is to work toward good and selective partnership— instead of just stating the obstacles and continued on page 40