Rob Starr, Content Manager, Big4.com

The findings from a newly released Monitor Distribution Report, sponsored by McGladrey LLP, the nation’s fifth largest provider of assurance, tax and consulting services, and the NAW Institute for Distribution Excellence show that Middle-market distributors are growing, but that growth – and the optimism that accompanies it – is tempered by a number of influences including faltering economies in Europe and elsewhere, rising commodity prices, competition from low-cost-country vendors, the continued housing crisis, health care law and uncertainties over which administration will lead the country following the November election.

Distributors will increase investments in process improvements this year compared to last. Thriving organizations are more likely to increase these investments than firms that are holding steady or declining. Thriving firms also are more likely to have increased productivity in the past year. The primary objectives cited for improvement initiatives are to reduce costs as well as to improve quality, customer satisfaction and speed.

Inventories will increase at nearly one-half of distributors, with seven percent expecting inventories to be increased by more than 10 percent. Yet despite these cost pressures and more inventory, the overall health of the industry is reflected in plans by most distributors to increase capital equipment spending in the next 12 months. That is being influenced by low costs of capital and respectable bottom lines at many companies.

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