Freedom USA’s CEO, Carl Depaolo, is confident the customer relationships made and maintained through the shortage will last decades
The past two years have taught a humbling lesson. In my 36-year distribution career it’s the most lead time pressure I’ve ever seen. What to expect next? As supply eases, expect to pay the price for double and triple ordering. Will there be an inventory glut in 2023? Seems likely. As we prepare for this change, relationships and customer service are the keys to success.
What have we all learned from this mess? Options are limited once you pass the top five or six franchised distributors and there is genuine value in having great independent partners. If you are not a billion dollar plus manufacturer, you’re likely not getting the services you should. Long and short term schedules, lead time buys and bonded inventory are some of what Freedom offers customers to offset the lack of services they experience daily. Manufacturers deserve more.
During this shortage, manufacturers had to get creative. These brave folk took a huge leap to meet their customers’ demands. They are realizing the value of an independent that puts relationships ahead of giant profits. In 2021 (and so far in 2022), Freedom’s gross margins haven’t changed more than a point or so from ’19 and ‘20. Where we could have made margin, we made friends. While the dollar cannot be ignored, the relationships we’ve made and maintained through the shortage will last decades.
Expect more disruption on a smaller scale. The coming year will be interesting to watch with the market correcting throughout 2023: it’s starting already.