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Are You Keeping Pace?
By: Murray Siegel
Issue: 2009may
A collective supplier performance report helps companies compare sales.
Is your horse 10 lengths ahead, with the rest of the herd, or trailing behind? While it is easy to internally gauge your sales relative to the previous month or year, that figure tells only part of the story. Performance levels within the entire industry are equally as significant, if not more so. Should you crow if your sales grow six percent at a time when the industry is ahead by nine percent? Should you worry if you are down two percent when the industry is down eight percent? Are internal adjustments necessary? And how would you ever really know how the industry is doing before it is too late?
To address this, the PPAI Supplier Committee introduced the Supplier Index in 2008. The committee’s goal was for PPAI to gather information from a sampling of top suppliers to help form an index—much like the Dow Jones Industrial Average—that concisely summarized industry performance. In the survey’s first year, 30 suppliers anonymously reported quarterly sales relative to the same quarter the previous year. An aggregate total was calculated and published both at www.ppai.org and in the monthly Supplier Update e-mail sent to all supplier members. For example, fourth quarter sales in 2008 were down 12 percent compared to the same quarter in 2007.
So far, suppliers have found the index useful. Joe Keely, MAS, director of sales for Fenton, Missouri-based supplier Quickpoint (UPIC: QUICKPT) notes that the data help his company with forecasting and viewing the big picture of the industry’s business climate. “The Index covers a cross section of product categories, so it is a very accurate picture for that time period,” Keely says. “It provides a valuable tool to measure our own results against other core industry suppliers—suppliers that derive the vast majority of their revenue from this industry, and whose results are not skewed by other markets.”
To launch the index, the committee approached suppliers with annual sales more than $5 million in key product categories relative to that category’s contribution to the industry. For example, there were more wearable and calendar companies than magnet factories.
But David Bywater, MAS, president of Iowa City, Iowa-based supplier Tru Art Advertising Calendars (UPIC: TRUART) appreciates the “us vs. them” view the index provides. “Benchmarking our success vs. the known supplier universe is very helpful,” he says. “It gives us a sense of whether we are exceeding, meeting or trailing the activities of the market. It also helps us understand our market share.”
Each company participating in the index answers two basic questions in a Zoomerang survey that takes less than one minute to complete. Those questions were: In the last quarter, did your sales increase or decrease compared to the same quarter the previous year? If so, by what percentage?
All survey results are blindly calculated within PPAI, so no one will ever know specific information about a company’s sales activities. Participants are guaranteed confidentiality, although the survey asks for PPAI or UPIC numbers to prevent duplicate responses from the same company. “The anonymous structure of the reporting for the Supplier Index gives us confidence that the numbers shared are honest,” says Kippie Helzel, MAS, vice president of sales for Erie, Pennsylvania-based supplier CPS\The Keystone Line (UPIC: keystone). “Based on that, we are able to evaluate our status relative to other key suppliers and to fine tune our projections based on the status of these other quality suppliers.”
With more companies participating, results are assured more statistical accuracy. The Supplier Committee hopes members will participate either by anonymously reporting information or, at the very least, observing the index figures and seeing how they reflect company performance. “The Supplier Index serves as a very timely benchmark for supplier sales in our industry,” says Mary Ann Farmer, MAS, president of Cape Girardeau, Missouri-based supplier Magna-Tel, Inc. (UPIC: MAGNATEL). “Having this information serves as a needed kick in the pants or a pat on the back for my organization. We all have a tendency to blame the bad stuff on the economy when we should be taking a close look at ourselves in the mirror.”
Murray Siegel has been director of marketing for Baltimore, Maryland-based supplier Towel Specialties (UPIC: TOWLSPEC) since 1998. During that time, he has served as president of Chesapeake Promotional Products Association and is currently chair of the PPAI Supplier Committee. Murray also worked for two different distributors in the 1980s and ‘90s.
How To Take Part
To maintain statistical accuracy, the Supplier Committee is now welcoming more suppliers to participate in the survey. To qualify, you must bill more than $250,000 annually (S3 status). This minimum requirement makes it less likely for sales to be heavily affected by the addition or absence of one or two enormous orders.
To participate, send an e-mail to murray@towelspecialties.com expressing your interest in joining the survey. Participants must agree to report their company’s index numbers within two weeks after a quarter ends. (You will receive an e-mail reminder with the Zoomerang link.)
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