Know your partners
Adapting to the changing channel will foster better relationships
By Bob Lyons -- Industrial Distribution, 7/1/1998
We have all heard the buzz words "partners," "partnering," and "partnerships." And most of us, distributors and manufacturers, have not had a clue as to their true meaning. As the global economy continues to place pressure on all of us to grow and increase gross profit margins, many barriers must be eradicated in the traditional manner of doing business. Only then can we come to a true understanding of the word "partner."We have seen in recent years a complete turnaround in the approach many manufacturers take in going to market. We can all recall having "exclusive" distributors in our market area -- distributors who handled a specific line in their industry segment (hose, abrasives, belting, etc.) that no one else in the area carried. The salesperson for that manufacturer would devote his total time to supporting those outlets, working hand-in-hand to grow their business. As distributors began to merge, be bought out, or establish new branch locations, we entered an era of "selective" distribution and distribution by market segments. This justified several different distributors having access to some or all of a manufacturer's product line in a given region.
Then we saw manufacturers enter an era of multiple distribution, signing just about everyone -- and even mumbling they would consider selling direct since distribution merely added another tier and provided little value added. While short-term growth was noted as a result of multiple distribution, it didn't take long for once prime distributors to realize they'd lost the manufacturer's support and enthusiasm. In the long run, this subjected the distributor and manufacturer to an adversarial approach to business. A complete distrust developed which did not add to the joy of being in the distribution business. Many manufacturers came to the realization that we are in a "people" business, and that customer loyalty is not automatically with him.
Finally, we are seeing a sincere attempt by several progressive manufacturers to revert back to regional "master" distribution (in which a distributor in the area sells to other distributors, OEMs and end-users). This is an attempt by manufacturers to fully understand the word "partnering." Now is the time to seek these suppliers and grow with them, with the knowledge that this will be a win-win-win situation for manufacturer, distributor and customer.
Further, distributors must share information with their manufacturers and support their written or verbal agreements to the letter of the law. Real growth is the key for both parties! The distributor must agree to give the time and resources necessary to meet objectives. In many cases, joint sales calls must be made to apprise the customer of the programs in motion and how they can benefit their company. Sharing of information is the key! The manufacturer now becomes an integral part of the equation...sound familiar?
Strategically, we must seek the growth markets in our area -- together. We cannot cry about seeing our blue-collar factories close. Transitional business is coming to town -- be it pharmaceutical, biotech, or the food industry. New products...new terminology...new markets! Ironically, there may be even better potential there than in the old industrial base we all lived on for so many years.
So, seek the "best of the best" manufacturers for the products required. Have you graded them...as they have graded us? Do they truly support distribution...even at the OEM level? Do they have their own sales force? Do they provide leads or drive business through you? Do they allocate funds toward new product development, training, and education? Conversely, manufacturers must assess the distributors they are signing or discarding. Do you have a training program in place? A quality program? A professional sales force? Technology to support business?
We must also seek the best customer base possible -- growth-oriented companies that are global, ones that pay on time, and ones that truly recognize the difference between price and cost. The bottom line for everyone will be enhanced, and true growth will develop. In this scenario, a harmonious relationship will be built for many generations to come.
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