Separate yet equal divisions
Shifting from an OEM sales culture to distribution requires a new philosophy
By William A Fulton -- Industrial Distribution, 3/1/1999
IN THE BLINK OF AN EYE, the contest for lasting profits can be lost for those firms whose traditional way of selling has not kept pace with today's market needs. Adhesives and sealants companies with a rigid corporate sales strategy are no exception.Many in the industry serve their large OEM clients on a direct-sale basis, while relying on distributors to reach smaller customers. Materials sold with identical labels and the same product codes often create marketplace confusion, because distributors are unclear on how best to promote the product line. Equally troubling, distributors worry that they may find themselves in direct competition with manufacturers that are, in effect, also serving as their suppliers.
An alternative tactic to completely separate OEM and distribution marketing functions was instituted at our company three years ago. With this approach, two separate yet equal operating divisions were created. Having dedicated business development cultures that reflect the specific needs and values of each type of selling is the key to success within the different market sectors.
Our company's OEM Division sells adhesives to automobile manufacturers, aerospace companies and other high-volume users. That group's business is considered a high-technology portfolio, since nearly every product is custom formulated.
The Construction & Distribution Division has a different orientation. We serve tens of thousands of end users through a matrix of general and specialty distributors, as well as a nationwide network of exclusive representatives. Selling adhesives through industrial distribution channels requires some technical know-how. This aspect of the business can be something of an art.
Being proficient at industrial distribution requires -- at every level of the operation -- a keen understanding of freight policy, assortability, local warehousing, master distribution, price policy, sales literature and promotional activities. Even working via electronic and interactive media is important.
Those of us on the distribution side of the business good-heartedly urge ourselves to "think by the drop," as a reminder that seemingly small issues matter a lot to our type of customers.
Conversely, OEM-oriented companies that dabble in distribution can create undue problems if they tend to measure everything by a customer's total sales volume. The perceived translation being: "The bigger customer you are, the better service you will receive."
We believe well-orchestrated distribution programs must emphasize policy and procedure, rather than the buying patterns of a handful of individual customers.
All of which prompts this question. Can distribution and OEM selling co-exist in the same company?
They can, but only if the management philosophies of doing business are truly separated. The senior management or ownership of the business must support the integrity of that organizational structure in all circumstances and through all economic cycles.
Distribution-oriented managers also have to find ways to motivate their people to care about the small details. Those simple everyday measures, taken together, can separate outstanding companies from merely good companies.
William A. Fulton is Vice President & General Manager of the Construction & Distribution Division of Bostik, Inc.
Talkback
Related Content
Related Content
Sponsored Links
View All Blogs
