Strictly Main Street
Edition: October 2005 - Vol 13 Number 10
After almost 20 years of experience with distributor groups, Kevin Neuman believes he has a niche. And he intends to parlay it in his new company, Distribution Services Alliance. Neuman is the former managing director of CIDA, part of National Distribution and Contracting Inc. in Nashville, Tenn. He left the company July 31.
“You need professional people to provide member services,” says Neuman, who began his distribution career in 1966. “I don’t have to be an expert in first aid or physical medicine (two of the distribution market segments DSA is targeting). But I do have to be a professional in group management in order to help distributors accomplish what they want to accomplish.”
Identifying channels’ needs
Neuman intends to focus his efforts on what he calls “Main Street” distributors, that is, smaller, independent companies who can benefit by joining with similar companies to achieve some economies of scale. Neuman says unlike large, publicly held companies, Main Street distributors often lack the resources to employ in-house professionals, such as legal counsel or accountants. Just as important, they lack the time to tackle projects that could help them move forward.
“What we want to do is identify those projects, and adapt [DSA] to the particular channel’s needs,” he says.
Initially, DSA will target distributors in the first aid/safety and physical medicine markets. Home care and international healthcare are two other possibilities. Although each channel has its own needs, Neuman hopes to identify commonalities among them in order to achieve the greatest economies of scale. “Certainly, each channel has its own nuances,” he says. “But many are identical. And the distributors within each channel don’t necessarily know that, because they don’t cross over. Someone needs to bridge that gap.” That would be DSA.
Neuman has identified a number of potential offerings for DSA:
• Contract negotiations with suppliers: the traditional buying group function
• Agreements with third-party logistics companies to provide warehousing for DSA members: independently operated warehouses could provide economies of scale for distributors who are unable to meet manufacturers’ minimum order quantities
• Marketing of Main Street distributors to regional and national purchasing groups: E-commerce to allow end-users to order products electronically from their distributors and allow distributors to do the same with manufacturers. Ed Roberts, DSA’s director of information and e-services, has developed an e-commerce system called eRun, which uses industry standard PHP, a widely used scripting language.
DSA has also contracted with Roswell, Ga.-based Distributor Data Solutions to provide electronic data interchange and e-commerce services to distributors to enhance electronic communications with manufacturers; this will allow distributors to electronically receive product content from manufacturers, manage rebates and place purchase orders.
• Private-label consulting: Calling private labeling a “channel by channel issue,” Neuman believes that with his experience, he can provide DSA members an objective opinion about private labeling.
Neuman believes DSA will make a dent in the distribution community by virtue of its unique mission. “We’re not a distributor buying group,” he says. “We’re professional group management people who want to adapt a portion of Distribution Services Alliance to serve [particular] channels, and to provide the member services that each channel needs.”