The Future Is Market Center Distribution

December 19, 2001
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LAS VEGAS, NV — There is a new catch phrase in the wholesale-distribution business. And according to one industry expert, it’s a phrase that people ought to become familiar with.

Market Center Distribution (MCD) is the phrase. The expert is J. Michael Marks, principal in the Indian River Consulting Group, Melbourne, FL.

“The MCD concept has been around for 18 months and now we want to start a serious dialogue about it,” Marks told NHRAW meeting attendees. “This is a fundamentally different initiative — this is a discussion.

“And it is about establishing a dominant market position for wholesalers and distributors.”

DEFINING MCD

NHRAW says it developed the MCD model to “effectively advance the science of delivering hvacr products and supplies to the ultimate user.”

The distributor association defines MCD as “the integration of information technology with regionally established distribution centers, staffed and managed by persons familiar with local markets and customers. This model is intended to bring order and efficiency to the distribution channel by eliminating redundancies through seamless information exchange among suppliers, distributors, and customers; and the use of appropriately trained distribution personnel.”

Marks said that redundancies are major problems in the distribution channel. He asked NHRAW members to name a few:

  • “The warranty process;
  • “Part/part number synchronization;
  • “The planning process is not aligned between manufacturers and distributors;
  • “Unappealing promotional support”; and
  • “Too many layers of training.”
“We need to discuss MCD on our upstream and downstream sides,” Marks said. “The discussions have to be one-on-one.”

The MCD process is described as having a twofold purpose:

1. “To serve as a testament to the effectiveness of locally sited, independent distribution in an era when the function is under attack by new channel entrants who would have us believe that the ‘middleman’ is no longer necessary. MCD affirms the role of the independent stocking distributor, and all he or she brings to the table as the key linchpin of the distribution channel.”

2. “To challenge the independent distributor to continually improve his or her performance in the channel. This will be done by continuing identification of and strengthening of core competencies possessed by those distributors. To accomplish this, trade associations like NHRAW must provide education and training programs to facilitate the process of distributor self-evaluation and improvement.”

Marks expressed the importance of the MCD concept because it goes to the very core of the distribution channel: personal relationships.

“The challenge of NHRAW is to marry the concept of MCD with the main function of our trade — face-to-face personal relationships with customers.

“This makes more business sense to me than anything I’ve ever seen in the trade.”

Publication date: 12/24/2001

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