FUTURE TRENDS

1
FUTURE TRENDS

• Industry Consolidation Will Accelerate
• Manufacturers, Distributors Wholesalers
• Big Will Get MUCH Bigger or Get Out
• Small Must Focus on Niche Segments
• Biggest Future Threat Likely NOT in
• the Industry Today
• Technology Will Dramatically Increase
• Both Speed Efficiency but Require
• Significant Investment

2
ROLE REVERSALS

• Manufacturers Becoming Wholesalers
• Wholesalers Becoming Distributors
• Wholesalers Becoming Brokers

3
ROLE REVERSALS

• BENETIT
• Increased Understanding of Each Others Key
  Business Issues
• CHALLENGE
• Greater Transparency of Program/Profit
  Dynamics

4
BOUTIQUE vs CAFETERIA

• Define Future Role / Function of Jan-San
  Wholesaler
• Selective Line Boutique or Comprehensive
  Cafeteria
• Consistent Strategy or Line-by-Line Approach
• Examples From Other Industries With Deep
  Wholesaler Penetration
• ie. Grocery, Drug, Office Products

5
BOUTIQUE

• Exclusive Lines in Many Key
• Jan-San Areas
• Space Constraints Are Real
• Product / Application Redundancies
• Line Access / Selective Distribution Determines
  Point of Purchase

6
BOUTIQUE

• EXAMPLES
• Rubbermaid or Continental
• GoJo or Sani-Fresh
• Etorre or Unger
• Time Mist or Technical Concepts

7
CAFETERIA

• EXAMPLES
• Dawn, Joy, Palmolive Sunlight
• Tide, Ajax All
• Dial, Safegaurd, Softsoap Lever 2000
• Lysol Clorox Spray
• Fantastic, Formula 409 Simple Green
• Easy Off Mr. Muscle

8
CLARIFY ROLES Manufacturer, Rep, Wholesaler

• REQUIREMENT Reduce / Eliminate Duplication
  Throughout the Channel
• Warehouses
• Customer Service Functions
• Sales / Tele-Sales
• Distributor Marketing
• Promotional Programs

9
CLARIFY ROLES Manufacturer, Rep, Wholesaler

• REQUIREMENT Identify Most Efficient/
  Effective Way to Create New Business
• Lowest Cost - Identify True Costs
• Highest Impact / Leverage
• Accountability For Sales Performance

10
RE-DISTRIBUTION DATA

• Basic Requirement For Expanded Wholesaler Role
• Security of data potential loss of control
• Prudent measures that can be taken
• Extension of Factory Field Warehouses/ Order
  Processing Systems
• Accurate confirmation of orders shipped
• Todays speed will always be unacceptable
• Technology investments required for process
  automation

11
FUTURE THREATS

• Biggest Bundle Wins
• Yesterdays giant is tomorrows midget
• Logistics will rule TURNS!
• Access to lines will NOT be a barrier
• Technology Investments
• Requirements continue to grow
• Virtual extension of the factory
• Transparent information/costs

12
FUTURE THREATS

• Low Barrier to Entry Warehouses
• Services Required vs current model
• Consolidation Delivery
• Costs vs Value Added Marketing, Sales, etc
• Need to have vs Nice to have (ie. catalogs)
• Capital Requirements
• Inventory investment
• Technology
• Margin Requirements

13
FUTURE THREATS

• National Coverage
• Seamless Operation
• Ownership vs group membership

14
SOURCES OF REVENUE

• ASSUMPTION Margin Squeeze Will Continue To
  Grow
• Sales Costs / Broker Commissions
• End-User Bids
• End-User Drop Shipments (3PL)
• Distributor Data beyond the basics
• Dual House Model

15
MINIMUM ADVERSTISED PRICE (MAP) POLICY

• Component of Advertising Program NOT Price
  Control
• Pricing Decisions Controlled by the Wholesaler
  NOT the Manufacturer
• Does NOT Impede Price Negotiations With Key
  Distributors
• Does NOT Guarantee Wholesalers
• Net Margin

16
MINIMUM ADVERSTISED PRICE (MAP) POLICY

• Prevents Death by Fax Machine
• Preserves the Price Equity of Key Products in
  Trade Advertising
• Compliance is Policed by Wholesalers
• Used Frequently Outside of Jan/San Industry