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When manufacturing finally started to pick up last year, the collective sigh of relief from distribution executives was nearly audible. For the first time in two years, distributors started seeing a consistent uptick in monthly orders.

While a long dry spell is always painful to live through, progressive distributors learned important lessons. Many took a hard look at staffing and inventory levels and made the difficult choices to run leaner, more efficient operations. Some also learned that one way to gain market share in a soft economy is to assist customers with their own cost-containment efforts.

Our cover story is about AIM Supply Company, an industrial distributor headquartered near Tampa, Fla., that serves a diverse customer base across the U.S. In the past few years, the company promoted a variety of its Cost Saving Initiative (CSI) programs to help customers save money and improve profitability.

Getting customers to focus on cost containment is relatively easy when business is slow. As business starts to improve, however, some companies become lulled by a false sense of security and fall back into old habits. They’re not as diligent as they once were at keeping a lid on costs and, before long, inventory levels begin to creep back up.

While it’s always good to see sales on the rise, distributors can demonstrate they’re serious about adding value by preventing customers from sliding back into wasteful spending practices.

“You can save customers money in good times and in bad times,” says Chuck Losh,  AIM Supply president. “The potential to save goes up as production increases. We can really impact a customer’s profitability if they maintain the same discipline when business starts to improve.”

It’s great to hear that business conditions are improving for manufacturers. That translates into better days for distributors. But now is not the time for U.S. manufacturers to resort to old ways of doing business.

This editorial appeared in the May/June 2004 issue of Progressive Distributor magazine. Copyright 2004.

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