Because the products are mainly supplies and consumables, the products purchased by individual customers are primarily repetitive purchases bought on a bi-weekly or monthly cycle.
New Web ordering and purchase control systems associated with Infor’s E-Commerce and Infor’s ERP FACTS offer jansan distributors a significant opportunity to differentiate themselves and offer services not available from others.
Special Pricing Model of the Industry
Prices are negotiated item by item, with margins varying from item to item and customer to customer based on price sensitivity, perceived value, value added, order size, and special services. In many ways the pricing strategy is like the grocery business – you give away the milk and make it up on the canned goods. The difference is the milk and canned goods will vary customer to customer. This means that the price of an item can vary greatly from customer to customer. Pricing is generally negotiated between the salesman and the customer for each item. Thereafter pricing will be based on the margin of the last sale, i.e., if the cost goes up, the price will be adjusted to yield the same margin as on the last sale.
Special, off-invoice competitive costs are often negotiated between the distributor and vendor to meet specific competitive situations. These contracts require the distributor to send a report to the vendor with details of the sale to receive a credit to reimburse the distributor for the difference between floor cost originally paid and the contract cost.
The paper and cleaning supply distributors are very similar in their needs. In most instances, paper distributors sell jansan supplies and jansan distributors sell paper. The difference is the concentration of the mix. Paper distributor sales margins run 20 to 28% and jansan distributors’ margins run 35 to 45% on average. Orders are smaller and salesmen write fewer total dollars of sales in jansan. Because of the difference in margins, a $2MM jansan distributor will be as large as a $4MM paper distributor.
A specialized market segment of paper distributors are paper and cleaning supply distributors who sell to other distributors. They are in fact, wholesalers who do not sell to end-users, but sell only to distributors that are actually business-to-business retail distributors. We call them master distributors. Their pricing model is not nearly as demanding as for the retail distributor. On the other hand, their need for reporting is extensive because of their accountability to their principle manufacturers.
Another class of paper distributors is the fine, or printing paper distributors. While they are called paper distributors, they are actually in a very different market, selling printing papers to commercial printers and in-plant printing operations. Printing paper merchants focus on commercial printing paper with some expansion into printing supplies. Paper distributors are seeing a decline in printing paper sales and decreasing margins. To combat this, many printing paper distributors have either merged with other distributors or extended their offerings to include packaging and janitorial supplies.
Distributor Profile
Most paper distributors sell a broad line of products drawn from all or many of the market segments, while others specialize in one or two market segments. The key element is that they sell consumable supplies that customers use up and regularly repurchase. The broad mix of products gives these distributors efficiencies of scale in distribution – they stock, sell and deliver many products used by the same end-user, so they become the most efficient source of supply.
The market segments most frequently served by paper distributors are as follows:
Office Supplies – add rolls, computer supplies, computer paper, computer forms (copy, fax, mailer bag-padded, printed), stationary, ribbons, labels, and tags, etc.
Janitorial Supplies – Distributes cleaning supplies and equipment, liners, cleaners, floor finishes, etc. (juice and equipment)
Disposable Food Service – plates, cups, lids, plastic cutlery, napkins, straws, to-go packaging used by restaurants and institutional feeders
Grocery Packaging Supply – bags, film, foam trays, etc. used by grocery stores and delis.
Sanitary Papers – paper towels and toilet paper
Packaging and Shipping Room Supplies – tape closure, loose fill, foam and bubble cushioning, corrugated cartons, stretch films, pallet wrap, wrapping paper, tissue, padded envelopes, labels, marking supplies, strapping, etc. and the equipment used for dispensing these products.
Industrial Specialties – pressure sensitive tapes, gloves, disposable wipes, protective clothing, specialty cleaning products, etc.
Retail Packaging – printed and plain paper bags, plastic bags, boxes, tissue, ribbon, wrapping paper
Fine or Printing Paper – cut-size business papers (board grades, bond, copy paper, duplicator, ink jet, technical application), envelopes (custom print, custom size, interdepartmental mail, plain, printed stock, vinyl)
Special Needs of the Paper Distributor
Pricing – In the paper distribution industry, exception pricing negotiated with the customers based on competition is the rule and standard (matrix) pricing from the catalog is the exception. Distributors need to track the last price and cost for every item sold to every customer. When the cost of an item changes, the distributor will normally adjust the selling price to make the same margin based on the new cost.
Order Entry – Since 90% of all orders are repeat business, customer’s history is very important.
Delivery – Paper and cleaning supply distributors must meet DOT (Department of Transportation) and HASMAT (hazardous materials) requirements for properly making delivery slips. Many products require distributors provide Material Safety Data Sheets to customers to meet OSHA requirements.
Commissions – Commissions are normally based on profit dollars per order, and can vary by item or category, salesman, and order type (warehouse and direct). It is unlikely that a distributor will be willing or able to change their commission structure to purchase a new system. So any new system will have to meet their current commission structure.
Key Infor’s ERP FACTS Functionality
Rebate Tracking – ties rebates directly to order processing, making them easier to track, which can help maximize to amount of money earned.
Multiple Units of Measurement – offers unlimited flexibility with units of measure on an item by item basis, while allowing differentiation between purchasing (i.e., by the case, pallet, etc.) and sales (I.e., by the pack, kit, etc.)
Pricing Service and Pricing Matrix – enables distributors to update prices and enter new items into the system electronically.
Delivery Confirmation – delivery information is loaded into a PDA running a palm operation system. Then at the delivery site the customer signs for the delivery and after the PDA uploads the signature into the back-end system, employees can view it immediately.
EDI – send and receive EDI, 840, 843, and 850 by requesting to quotes from both the sales and purchasing modules.
Labeling – ability to generate labels such as items, bins, tags, shipping, etc. from receiving, shipping as well as on demand. It also has the flexibility to provide customer specific labels at shipping time.
Order Entry – one screen order entry, quote entry, quote to order conversions, and expediting.
B2B Seller – offer ‘round-the-clock inventory information with a web based storefront
Component kitting and processing – allows distributors to efficiently manufacture, stock, track, and sell kits and other complex items with multiple components, or disassemble items and redeploy its components to stock.
Light Manufacturing – tracks the cost as a raw item goes through various stages (including movement at outsourced vendors) and rolls them up into a final cost for the finished good.
Automated Accessory Items – this will prompt the salesperson to suggest a companion item or go-together item when an item is placed on order.
Wireless Warehouse Management – a small wireless hand-held device communicates with your Infor ERP FACTS system, sending information about who picks what inventory activity and when in real time for accuracy, control and efficiency.
Remote Order Entry – download and store customer information in a PDA that can upload orders directly into Infor’s ERP DACTS.
Alerts – Given that paper distributors must manage razor thin margins on an item-by-item basis, Infor’s ERP FACTS Automated Alert (KPI’s) functionality would provide a great deal of visibility and control to distributors, allowing them to maximize their profit per line item.
Infor has the following Customer Overviews available on Paper Distributors:
Strauss Paper Company
Available on Request
Buying/Marketing Groups
The United Group (TUG) – www.unitedgroup.com/ - A nationwide marketing and sales organization comprised of independent distributors and allied vendors of disposable products from jansan, industrial-packaging, and foodservice markets; comprised of over 300 distributor members and over 150 vendors with locations across the country to serve their customers
Consolidated Distributors Inc. (CDI) – www.cdi-1.com – a member owned and operated marketing group dedicated to increasing the market share and profitability of independent paper and sanitary maintenance wholesale distributors.
Network – www.nsconline.com – North America’s leading distributor of housekeeping and maintenance supplies, industrial packaging, food service disposables, and related products; a $7 billion distribution organization, serving the healthcare, manufacturing, and facilities management and maintenance industries by consolidating the resources and strengths of more the 80 distributors; operating nearly 400 distribution facilities throughout North America serving 750,000 customer locations
Pro-Link – www.prolinkhq.com – Cleaning equipment and supplies
NISSCO –
www.nissco.com - The NISSCO Group is one of
Distributor Partners of
Triple S – www.triple-s.com - Triple S is a nationwide network of sanitary supply distributors with over 175 locations throughout the
Afflink – http://www.afflink.com/ - is the leading sales and marketing organization in the industry - connecting more than 300 Distributor Members and 250 preferred Suppliers of Janitorial, Packaging, Foodservice, Healthcare, Safety and Office products to thousands of customers everyday. AFFLINK offers a comprehensive range of business solutions to help partners gain a competitive advantage in today's global marketplace.
Educational Resources
PaperOnWeb.com – www.paperonweb.com - This site carries largest list of Abbreviation & Acronyms related to Paper, the best and largest Paper Dictionary, list of Pulp, Paper & Waste Paper Grades, Paper ISO Sizes, Chemical used in Pulp and Paper Manufacturing, common Basis Weight, Density of Paper and Bleaching Stages.
ISSA.Com – www.issa.com - As the worldwide cleaning industry association, ISSA’s global membership includes more than 5,500 distributor, manufacturer, building service contractor, and in-house service provider companies. ISSA offers the industry's largest cleaning shows around the world; a vast array of educational videos and resources; networking on local, national, and international levels; industry management standards; legislative and regulatory services; and industry news specifically focused on the world's cleaning community.
Publications
Sanitary Maintenance (12 issues/year) – www.cleanlink.com - Sanitary Maintenance is Trade Press Publishing’s flagship magazine and the original publication of the janitorial supply industry. Since its launch in 1943, Sanitary Maintenance has become the leading magazine for distributors and wholesalers of sanitary supplies. Subscribers read Sanitary Maintenance for industry trends, marketing data and timely reporting on important issues. The magazine reaches every type of distributor active in the sanitary supply marketplace including janitorial, paper, foodservice, industrial and wholesale.
Maintenance Supply (9issues/year) – www.maintenancesuppliesmag.com - Since 1956, Maintenance Supplies continues to inform a diverse readership, comprised of food service, industrial, Jan/San and paper packaging distributors who carry and sell janitorial supplies, of industry trends and methods to stabilize and grow profits.
Distribution Sales and Management (6 issues/year) – www.gonpta.com - comprehensive source for paper and packaging industry and NPTA member news, data and statistics, education, benefits and advocacy. In addition to featuring a new design, the web site has an upgraded navigation structure to improve usability and increase resources for NPTA members and paper and packaging industry professionals.
Trade Shows
ISSA/INTERCLEAN – the largest cleaning shows in the world! No other trade shows bring such a wide range of resources related to the cleaning industry together under one roof.
PackUSA – NPTA’s annual meeting held in conjunction with ASSA/INTERCLEAN
