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Distributor's Link Magazine Spring 2019 / Vol 42 No2


44 THE DISTRIBUTOR’S LINK Nelson Valderrama Nelson Valderrama is the CEO of Intuilize, a software Service platform that specializes in helping mid-sized distributors transform data into profits. With more than 22 years’ experience as P&L manager executive for major PE firms and industrial distributors. Nelson has dedicated his career to help business uncover hidden competitive advantages and unleash the power of data in the new Digital Economy. HOW SMART DISTRIBUTORS CAN SURVIVE AND THRIVE AS TARIFFS KEEP INCREASING If you’ve been in the industrial distribution industry for any significant amount of time, you’ve no doubt lived through what I like to call “the murmurs”. The cause of the murmurs has changed many times throughout the years — looming automation, sweeping digitization, economic downturn, the shift to ecommerce… The murmurs always start with a threat to our business that emerges quickly and causes a widespread chatter followed by panic, followed by a mad rush to solve the equation first. Well today, we find ourselves smack dab in the middle of one of the scariest murmurs our industry has faced in years: a global trade war highlighted by tariffs on imports of up to 25%. Now, much like murmurs of the past which always seem like a ticking clock toward impending doom, I actually believe that global tariffs present a very interesting opportunity for a very small number of savvy distributors — those that understand how to use data to their advantage. First, Let’s Know Where We Stand Today It is no secret that a core focus of the Trump administration’s platform has been to reshape the U.S.’s global trade policies to focus on an “America First” agenda. 1 President Trump set out early and openly to reshape a number of international relationships and trade agreements he deemed unfair, and made no CONTRIBUTOR ARTICLE bones about the fact that tariffs would be a central tactic to move the needle in the desired direction. Over the course of the past two years, these global trade missions have taken many shapes and proposed regulations have shifted constantly. We’ve seen a restructuring of NAFTA that places greater penalties on aluminum, tariffs on steel imports from South America of 10–25%, and of course, a very public battle with China resulting in a 10% tariff that is set to rise to 25% if no resolution is enacted. The hard truth is that in this administration, the only thing we know is that we won’t know much until it happens. Even when tariffs or regulations are announced months in advance, we frankly can’t rely on them coming to fruition nor can we rest easy thinking we’ll have fair warning when a new tactic takes hold. What we can do however, is get smarter about how we tariff-proof our businesses, and that all starts with using data in smarter, more proactive ways. Start Using Data to Inform Your Pricing Decisions One recent business owner I worked with was trying to address the increased costs for her business from tariff hikes. After some deliberation, her strategy was to take all their current prices and increase them 12%. I asked her why 12% and not 12.5%? 1 CONTINUED ON PAGE 122



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