This week I have been preparing for two excellent conferences that I am speaking at in the next 2-3 weeks (Enable Catalyze and MDM SHIFT) and talking with channel leaders on calls… It’s an uncertain time in the business that has many leaders somewhat paralyzed or in a wait and see attitude on what to do for the balance of 2025.
How to Make Orange Juice
In this uncertain time keep I keep finding my way back to thinking about Orange Juice. You are likely reading the headline above and that sentence and are thinking what does Orange Juice have to do with B2B Distribution?
I was taught the Orange Juice process about 25 years ago from Dick Schmid at Crescent Electric Supply Company (Billion dollar + distributor in Electrical). As a visual learner his orange juice story has stuck with me, and I have always thought about distribution growth strategies since using Dick’s analogy. The orange juice story and analogy since then has helped me personally focus on what is important during times where there is a lot of noise and news that may divert attention from what our team can control and affect no matter the market conditions.
I found that the orange juice story was a simple way for leaders to think about their customers (oranges) and business (orange orchard) where our end outcome is we are making orange juice. The End Customers are the oranges and as a distributor and manufacturer you only make a small percentage of total sales as profits. The distributor and manufacturer nets just a percentage of the total sales the orange juice – as profit to invest in their business.
So, using that analogy of B2B Distribution making Orange Juice – How do you make money, grow sales, and profit?
- Grow Bigger Oranges – Find/Grow Share with Bigger Customers
- Squeeze more Orange Juice out of the orchard – Operational Excellence – Profit Increase, Pricing, Rebates, Buy Side improvement, and more
- Grow More Oranges – Find New customers, Enter New channels
- Buy Someone Else’s Orchard – Acquisition
- Build an Orchard in Another Town – Greenfields, New market expansion
- Invest in your Processing Plant – Improved facilities, equipment, processes, personnel, Digital, Automation, and logistics to capture and collect every drop you earned
If you have been reading our distributor series we do in partnership with Modern Distribution Management, you will see ways each distributor we have featured is managing their orange orchard.
Fastenal is all in on Grow Bigger Oranges, Ferguson is Buying Someone Else’s Orchard, WATSCO is squeezing more orange juice out of their orchard, WESCO is Focusing on Processing Plant and MSC Industrial is….and so on. Each of the distributors we have featured of course is doing more than just one of the above six ways to make orange juice, but most distributor strategic plans can be converted into a simple Orange Juice model.
When business slows or has uncertainty (tariffs, politics) – Improving your operations (cost containment, operational excellence) and growing your share with your largest and highest potential customers are the two “GO-TO” actions for almost every distributor and manufacturer.
Taking cost out and working to grow share at the account level, are often the only actions most channel leaders take in uncertain times. I have been fortunate to be on teams for leading distributors that view “uncertainty” as the time where opportunity is at their door knocking the hardest.
UNCERTAINTY = OPPORTUNITY
The oracle of Omaha Warren Buffet and many others have become icons by embracing the simple edict of the time to invest is when the competition is pulling back.
The one area where channel leaders underinvest during uncertain times is their “plant”. They often put off investments in process, technology, logistics, automation of human tasks into digital, etc. that will help them take share today.
I would encourage to invest in all three key areas – Grow Bigger Oranges, Squeezing more juice out of the orchard, and Invest in your plant. Everyone will be focused on the first two actions, and most of the big winners’ long term will also.
Where the big winners will likely create a long-term market grabbing lead is they will invest in their plant when others put off that investment for the future.
There is no better time than today to take share and never give it back.
Where will you/ your company invest your resources in 2025 to get more oranges?
If we can help, share an idea, or offer a 3rd party perspective, give us a call or send us an email.
