1. Executive Master of Industrial Distribution Residency Week Perceptions of Suppliers and Distributors Regarding Competitive Advantage Daniel F. Jennings Ph.D., PE Andrew Rader Professor of Industrial Distribution Texas A&M University August 2008

2. 2 Five Distribution Channels Electronics Electronics Electrical Electrical Plumbing Plumbing Building Materials Building Materials Associated Equipment Associated Equipment

3. 3 Developing A Scale To Measure Strategic Capabilities Developed population for each of the five channels (Total = 2100 firms; 1050 suppliers and 1050 distributors). 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. Selected two supplier firm participants and two distributor firm participants from each channel (N = 20). Became executive panel.

4. 4 Developing A Scale To Measure Strategic Capabilities Executive Panel received instructions on Model of Competitive Advantage Executive Panel received instructions on Model of Competitive Advantage Executive Panel were asked to individually name activities that would add value to their firm Executive Panel were asked to individually name activities that would add value to their firm

5. 5 Results Executive Panel Initial listing contained 37 activities; Initial listing contained 37 activities; Using Delphi process, an agreement reached on seven activities; Using Delphi process, an agreement reached on seven activities; Seven activities ranked by the executive panel and reduced to four activities Seven activities ranked by the executive panel and reduced to four activities

6. 6 Results Student Panel 25 MID students; 25 MID students; 121 undergraduate students enrolled in two classes; 121 undergraduate students enrolled in two classes; Used seven activities ranked by the executive panel. Reduced to four activities Used seven activities ranked by the executive panel. Reduced to four activities

7. 7 The Four Activities Supplier Relationships Supplier Relationships Customer Relationships Customer Relationships Competitor Relationships Competitor Relationships Top Management Activities Top Management Activities

8. 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)

9. 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

10. 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

11. 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

12. 12 Top Management Activites [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

13. 13 Distribution of Respondents By Firms Initial Sample Size Number of Responses Response Rate % ChannelSuppliersDistributorsTotalSuppliersDistributorsTotal Electronics707014023305338 Electrical808016034316541 Plumbing707014022274935 Building Material 707014019173626 Associated Equipment 707014021284935 Total36036072011913325235

14. 14 Data Analysis Construct Reliability (Cronbach Alpha) Construct Reliability (Cronbach Alpha) Principal Axis Factor Analysis Principal Axis Factor Analysis

15. 15 Cronbach Alpha Value ranges from 0 to 1.0 Value ranges from 0 to 1.0 Value = or > than 0.6 indicates reliability Value = or > than 0.6 indicates reliability Supplier Relationships—0.804 Supplier Relationships—0.804 Customer Relationships—0.775 Customer Relationships—0.775 Competitor Analysis—0.625 Competitor Analysis—0.625 Top Management Activities—0. 726 Top Management Activities—0. 726

16. 16 Factor Analysis Kaiser, Meyer, Olkin (KMO) statistic=0.645 Kaiser, Meyer, Olkin (KMO) statistic=0.645 KMO = or > 0.600 is acceptable KMO = or > 0.600 is acceptable Bartlett’s Test to measure significance Bartlett’s Test to measure significance –p value = 0.000

17. 17 Factor Analysis All 16 items are significant; All 16 items are significant; But loaded on five factors rather than four But loaded on five factors rather than four

18. 18 The Five Factors (Activities) Supplier Relationships Supplier Relationships Customer Relationships Customer Relationships Competitor Analysis Competitor Analysis Top Management Activities Top Management Activities Competitor Identification Competitor Identification

19. 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

20. 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

21. 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

22. 22 Top Management Activites [Var 13, Var 14 & Var 16] 13. Involvement of top management in operating the business 14. Encourages independent action by subordinates 16. Making decisions and taking action without knowledge of probable outcomes

23. 23 Competitor Identification [Var 09 & Var 12] 9. Identifying competitors 12. Identifying future actions of competitors

24. 24 Cronbach Alphas for the Five Factors (Activities) Supplier Relationships—0.804 Supplier Relationships—0.804 Customer Relationships—0.775 Customer Relationships—0.775 Competitor Analysis—0.601 Competitor Analysis—0.601 Top Management Activities—0.719 Top Management Activities—0.719 Competitor Identification—0.748 Competitor Identification—0.748

25. 25 Differences By Channel Type By Channel Type By Channel Role By Channel Role By Position By Position

26. 26 Criteria Five Economic Value Activities Five Economic Value Activities Performance (GMROI) Performance (GMROI) Age of Sales Managers Age of Sales Managers Education of Sales Managers Education of Sales Managers Job Tenure of Sales Managers Job Tenure of Sales Managers Years of Association with CEO Years of Association with CEO

27. Daniel F. Jennings, Ph.D., P.E. Texas A&M University 3367 TAMU College Station, TX 77843-3367 Phone: (979) 845-4984 Fax: (979) 845-4980 djennings@tamu.edu © 2008 TAMU