© 2005 Thomas and Joan Read Center IDIS – 444 Ethics and Leadership in Industrial Distribution Perceptions of Suppliers and Distributors Daniel F. Jennings Ph.D., PE Andrew Rader Professor of Industrial Distribution Texas A&M University

© 2005 Thomas and Joan Read Center IDIS – 444 Ethics and Leadership in Industrial Distribution 2 Five Distribution Channels Electronics Electrical Plumbing Building Materials Associated Equipment

© 2005 Thomas and Joan Read Center IDIS – 444 Ethics and Leadership in Industrial Distribution 3 Developing A Scale To Measure Value Activities Developed population for each of the five channels (Total = 2100 firms; 1050 suppliers and 1050 distributors). Selected two supplier firm participants and two distributor firm participants from each channel (N = 20). Became executive panel.

© 2005 Thomas and Joan Read Center IDIS – 444 Ethics and Leadership in Industrial Distribution 4 Developing A Scale To Measure Value Activities Executive Panel received instructions on Model of Competitive Advantage Executive Panel were asked to individually name activities that would add value to their firm

© 2005 Thomas and Joan Read Center IDIS – 444 Ethics and Leadership in Industrial Distribution 5 Results Executive Panel Initial listing contained 37 activities; Using Delphi process, an agreement reached on seven activities; Seven activities ranked by the executive panel and reduced to four activities

© 2005 Thomas and Joan Read Center IDIS – 444 Ethics and Leadership in Industrial Distribution 6 Results Student Panel 25 MID students; 121 undergraduate students enrolled in two classes; Used seven activities ranked by the executive panel. Reduced to four activities

© 2005 Thomas and Joan Read Center IDIS – 444 Ethics and Leadership in Industrial Distribution 7 The Four Activities Supplier Relationships Customer Relationships Competitor Relationships Top Management Activities

© 2005 Thomas and Joan Read Center IDIS – 444 Ethics and Leadership in Industrial Distribution 8 Questionnaire The Question: For each of the following statements indicate the number that best describes the potential to which the statement adds value to your firm’s success 5 (very high); 4 (high); 3 (neither high nor low); 2 (low); 1 (very low)

© 2005 Thomas and Joan Read Center IDIS – 444 Ethics and Leadership in Industrial Distribution 9 Supplier Relationships [Var 01 – Var 04] 1.Communicating with suppliers 2.Determining supplier satisfaction 3.Gathering data about supplier capabilities 4.Identifying specific opportunities to generate discounts

© 2005 Thomas and Joan Read Center IDIS – 444 Ethics and Leadership in Industrial Distribution 10 Customer Relationships [Var 05- Var 08] 5.Communicating with customers 6.Determining customer satisfaction 7.Gathering data about customers 8.Identifying specific opportunities to generate sales

© 2005 Thomas and Joan Read Center IDIS – 444 Ethics and Leadership in Industrial Distribution 11 Competitor Analysis [Var 09-Var 12] 9.Identifying competitors 10.Identifying strengths and weaknesses of competitors 11.Comparing strengths and weaknesses of your firm to that of competitors 12.Identifying future actions of competitors

© 2005 Thomas and Joan Read Center IDIS – 444 Ethics and Leadership in Industrial Distribution 12 Top Management Activities [Var 13-Var 16] 13.Involvement of top management in operating the business 14.Encourages independent action by subordinates 15.Willing to introduce newness and novelty through experimental and creative processes 16.Making decisions and taking action without knowledge of probable outcomes

© 2005 Thomas and Joan Read Center IDIS – 444 Ethics and Leadership in Industrial Distribution 13 Distribution of Respondents By Firms Initial Sample Size Number of Responses Response Rate % ChannelSuppliersDistributorsTotalSuppliersDistributorsTotal Electronics Electrical Plumbing Building Material Associated Equipment Total

© 2005 Thomas and Joan Read Center IDIS – 444 Ethics and Leadership in Industrial Distribution 14 Data Analysis Construct Reliability (Cronbach Alpha) Principal Axis Factor Analysis

© 2005 Thomas and Joan Read Center IDIS – 444 Ethics and Leadership in Industrial Distribution 15 Cronbach Alpha Value ranges from 0 to 1.0 Value = or > than 0.6 indicates reliability Supplier Relationships—0.804 Customer Relationships—0.775 Competitor Analysis—0.625 Top Management Activities—0. 726

© 2005 Thomas and Joan Read Center IDIS – 444 Ethics and Leadership in Industrial Distribution 16 Factor Analysis Kaiser, Meyer, Olkin (KMO) statistic=0.645 KMO = or > is acceptable Bartlett’s Test to measure significance – p value = 0.000

© 2005 Thomas and Joan Read Center IDIS – 444 Ethics and Leadership in Industrial Distribution 17 Factor Analysis All 16 items are significant; But loaded on five factors rather than four

© 2005 Thomas and Joan Read Center IDIS – 444 Ethics and Leadership in Industrial Distribution 18 The Five Factors (Activities) Supplier Relationships Customer Relationships Competitor Analysis Top Management Activities Competitor Identification

© 2005 Thomas and Joan Read Center IDIS – 444 Ethics and Leadership in Industrial Distribution 19 Supplier Relationships [Var 01 – Var 04] 1.Communicating with suppliers 2.Determining supplier satisfaction 3.Gathering data about supplier capabilities 4.Identifying specific opportunities to generate discounts

© 2005 Thomas and Joan Read Center IDIS – 444 Ethics and Leadership in Industrial Distribution 20 Customer Relationships [Var 05- Var 08] 5.Communicating with customers 6.Determining customer satisfaction 7.Gathering data about customers 8.Identifying specific opportunities to generate sales

© 2005 Thomas and Joan Read Center IDIS – 444 Ethics and Leadership in Industrial Distribution 21 Competitor Analysis [Var 10, Var 11 & Var 15] 10. Identifying strengths and weaknesses of competitors 11. Comparing strengths and weaknesses of your firm to that of competitors 15. Willing to introduce newness and novelty through experimental and creative processes

© 2005 Thomas and Joan Read Center IDIS – 444 Ethics and Leadership in Industrial Distribution 22 Top Management Activities [Var 13, Var 14 & Var 16] 13.Involvement of top management in operating the business 13.Encourages independent action by subordinates 16. Making decisions and taking action without knowledge of probable outcomes

© 2005 Thomas and Joan Read Center IDIS – 444 Ethics and Leadership in Industrial Distribution 23 Competitor Identification [Var 09 & Var 12] 9.Identifying competitors 12. Identifying future actions of competitors

© 2005 Thomas and Joan Read Center IDIS – 444 Ethics and Leadership in Industrial Distribution 24 Cronbach Alphas for the Five Factors (Activities) Supplier Relationships—0.804 Customer Relationships—0.775 Competitor Analysis—0.601 Top Management Activities—0.719 Competitor Identification—0.748

© 2005 Thomas and Joan Read Center IDIS – 444 Ethics and Leadership in Industrial Distribution 25 Differences By Channel Type By Channel Role By Position

© 2005 Thomas and Joan Read Center IDIS – 444 Ethics and Leadership in Industrial Distribution 26 Criteria Five Economic Value Activities Performance (GMROI) Age of Sales Managers Education of Sales Managers Job Tenure of Sales Managers Years of Association with CEO

© 2005 Thomas and Joan Read Center IDIS – 444 Ethics and Leadership in Industrial Distribution Daniel F. Jennings, Ph.D., P.E. Texas A&M University 3367 TAMU College Station, TX Phone: (979) Fax: (979) © 2008 TAMU