Distributor margins are up. The operational problems underneath them are still there.

Inflation pushed prices high and covered what wasn’t working:

• Manual order entry
• Bad ERP data
• Non-strategic SKUs

High prices make a bad operation look profitable. When the pricing cycle turns, and it always does, the P&L reveals every problem you chose not to fix.

The distributors who win the next down cycle are using today’s profits to build digital infrastructure and start automating the repetitive work. This cycle will happen again.

If you don’t use this period to clean up your operations, you’ll be exposed when margins compress.

These problems aren’t going anywhere.