How do you measure up?

Bruce Vernyi, Editor-in-Chief

Beginning on page 14, we examine results from a state-of-the-industry survey that we conducted over the summer, in a report that looks at sales, profit, human resource issues and operations of gases and welding equipment distributors.

We worked with an independent company — Noll Research — to conduct this survey, and 312 people spent upwards of 30 minutes to provide information we asked for on the way they run their businesses.

We hired an independent research firm to help us to do the study so that we could hold the answers at arm's length and guarantee to the people who answered the questions that their individual responses wouldn't be shared with anyone else.

The industry data helps to establish a benchmark set of numbers that distributors can use to run their businesses better.

In some respects the answers we see in the survey are remarkable: Respondents told us that the average distribution business sees a 25.5 percent profit margin. That is a great return on the investment and work you put into a business.

In other ways, the answers were not so surprising: The main issue that distributors cite as a serious challenge for their future is finding, training and keeping good employees. That is a challenge shared by nearly every business in North America — if not the world today.

However, between the extraordinary and the commonplace responses lies the rich information that you can use to see where your operation stands relative to its competitors.

In our report, we characterize the companies that responded to the survey. It's a good cross section small and large companies from 31 states, Puerto Rico and several provinces of Canada. We present the average responses from those companies, so that the numbers can be compared.

Is your distribution operation seeing a 25.5 percent profit margin? Are you paying average hourly wages of $10? Is your first-pass order fulfillment rate 91.6 percent?

With this, you can begin to put into effect the benchmarking practices that businesses commonly use to ensure their success. This information gives you a gauge that you can use to review your operations and determine where they might be deficient. Then, you can plan measures to improve them, implement those plans and review them again to see if the planned improvements worked.

Of course, there are distributors who are already using benchmarks and this improvement process, and this data will help them to verify that the benchmarks they have used are the right tools for the task.

This report is merely the first use of the data that we collected. We are planning reports for future issues that will be based on this information to help gases and welding equipment distributors to identify the best practices in their industry and to use those practices to evolve into more successful and dynamic competitors.