Changing traditions
Manufacturers and distributors need to prevent products from becoming commodities
By Alan W Sipe -- Industrial Distribution, 1/1/1998
As the play "The Fiddler on the Roof'' illustrated, traditions are wonderful roots to the past (at least in our minds) and harbingers of the future. Yet today, our traditions of manufacturing and selling through industrial distribution are changing. The good old boy, local distributors' network of the past is quickly being replaced by mergers, consortiums, affiliations, big box retailers and mega-national distributors.Add national pricing contracts, integrated supply, vendor-managed inventory and the Internet, mix it all together and traditions are out the window!
Is all this bad? No. Taking out costly redundancies and bringing speed and accuracy into industrial distribution are good things. However, these changes do create some challenges to overcome for major brand name "niche'' manufacturers if we are to keep and expand market share.
The first challenge for manufacturers is to keep your product from becoming a commodity. If distributors or end users see your widget as a commodity with all players being equal, you are in trouble. Keep your product differentiation in the front of your users and distributor's minds. If you truly have user benefits over the competition, shout them from the rooftop so you're heard and understood.
Read Mac Hanan's book, "Sales Shock,'' to find out why you don't want your brand name product to become a commodity. This is also a concern for distributors. If you and your competitor are indistinguishable in product, service, delivery, your only selling benefit will be price.
A second challenge is to continue your research and development to develop new products. All the integrated supply contracts and national contracts in the world won't replace the human curiosity to see and try what's new. If you do your development right and you do have a better mouse trap, you're in!
The third challenge is getting in front of the user. Manufacturing facilities are cutting back on maintenance, engineering, and purchasing personnel with the hope that the remaining employees are more efficient. With fewer employees and the same amount of work, there is less time to see salespeople showing new products.
I remember seeing a cartoon of an ancient warlord preparing for battle by sharpening his sword. In the next caption, the warlord's lieutenant is telling a salesman, who is holding a Gatling Gun, that the warlord is too busy to see any salesmen. Recently, one of our salespeople was turned away from a detailing call at a manufacturing facility where he was told that they only see salespeople accompanied by their integrated supplier. (See challenge four.)
The life of an industrial distributor who supports integrated supply is not easy, and that is challenge number four for manufacturers. No longer can industrial distributors concentrate on their traditional nuts, bolts, machine tools and pliers. Now they're supplying all of the above and everything from office supplies to hot dogs for the company cafeteria, while also taking care of a satellite plant 2,000 miles away. All this and trying to make a buck, too. Who has time to see a vendor salesman? This is a problem we will continually have to deal with.
And challenge number five: the Internet! As you read this article, some high school kid with a modem and a bankroll could be setting up a virtual distributorship on the Internet. He would ship everything by Federal Express, only take credit cards, use a specialty logistics warehouse when he had to and beat the pants off traditional distribution's pricing. This is definitely possible. Who knows where this is going.
Major brand name manufacturers have prospered for years by producing the best products available in our niche, and marketing them through traditional distribution. Today, those traditions are gone and, like the fiddler on the roof, if you don't adapt to and take advantage of the many changes, you may end up cold, shaky or gone!
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