Going from strength to strength

Over the years, it has been interesting to watch the progress of IDI Independent Distributors Inc. What was a small group who got together some 25 years ago to develop some buying clout has evolved into Canada’s largest industrial distribution network of 120 members with combined revenues of almost $1-billion.

IDI members help their customers achieve such benefits as:

* Advanced e-business solutions, to reduce paperwork and administrative costs

* Comprehensive inventory management techniques

* Standardized pricing

* Product volume leveraging

* Process improvements.

IDI is dedicated to streamlining MRO supply chain management through an entrepreneurial approach and up-to-date web-based technology. Its head office is in Mississauga, Ont., where the group maintains a sophisticated marketing organization and operates a 22,000-sq ft warehouse, allowing it to flex even greater purchasing muscle for the benefit of members.

To serve members and their customers, IDI publishes idisupply, an 84-page full-colour glossy magazine, with a mix of news and products. The twice-yearly publication carries a complete listing of member companies and locations. IDI is also in the process of compiling an 1,800-page catalogue of products that will be fully digitized for electronic as well as print distribution.

IDI is owned by its distributor members, with each having a single vote. Partner programs with suppliers allow the group to combine purchases for rebates and other benefits. The warehouse program assures further savings and lets members buy direct, for prompt shipment at best possible price without having to carry their own inventory.

Members may also buy from other members and the group has focused much attention on negotiating exclusive deals with U.S. suppliers, again resulting in efficiencies and cost savings.

IDI represents four main sectors: industrial supplies; power transmission

and bearing products; safety supplies; and fluid power products. Over the years there have been many changes among the sectors, especially with regard to consolidation in the power transmission and bearing industries.

In some regions of Canada, for example, the small power transmission and bearing supplier scarcely exists anymore. Here IDI can level the playing field and provide the opportunity to source product from all across North America through a single group.

Working with IDI provides such benefits as monthly cost-savings reporting, summary billing and vendor-managed inventory. Costs stay under control through savings in labour, price and contract negotiation, asset reduction and engineering flexibility.

The National Accounts Program helps multi-plant organizations structure their purchasing programs with streamlined negotiating and aggregated reporting. Participating companies receive monthly reports of their savings.

To free up time so as to be able to service their customers better, IDI members may now communicate electronically all information regarding national contracts with the IDI head office, where tracking and reporting tools keep the process running at peak efficiency.

Working in collaboration with U.S. strategic partner IBC (an industrial buying group for independent distributors based in Hartford, Conn.), the group uses Visio software to document the whole process side of contracts and contract implementation, allowing all cost and sales-reporting functions to be made directly through the IDI website, with further ability to post national accounts information online and fill out contracts.

Fully half the membership is involved in servicing national accounts to some degree.

Customers can build a complete multi-line, multi-vendor purchase order online and receive a single invoice when the items are shipped. The IDI system offers full compatibility on both sides of the transaction with all major software packages, including Oracle and SAP.

IDI has made a commitment to stay on the leading edge of e-commerce, which is simply beyond the capability of members on an individual basis.

Costs are kept under control because most e-commerce development is done in-house. IDI finds that the biggest challenge now is not the technology but communicating to members what they can do with the resources at their disposal.

If independent distributors have a phobia, it’s the dread of the Friday afternoon call from a valued client informing them that they are switching to an integrated supply contractor, and this can happen no matter how good the individual relationship may be. IDI originally countered this kind of thing in a defensive mode, but today it can market its members’ capabilities as part of an overall integrated marketing offensive.

Membership numbers fluctuate every year but the pattern is to see numbers gradually increase. New companies come on board all the time and others drop out, often due to mergers and acquisitions, such as when one member takes over another. Above all else, members and potential members must prove financial soundness and offer superior products and services. There are currently 85 shareholder companies as members, with 223 locations in 137 cities.

More than anything else, IDI levels the playing field by giving its members the same scale of operations, including e-commerce capabilities, as do major, multinational competitors. As well, it offers the bonuses of an entrepreneurial approach and a much broader product range than any multinational.

Richard Rix is a Toronto-based business writer who may be reached at 416-449-0878 or richardrix@sympatico.ca.