Fair play is alive and well
There's nothing coincidental about maintaining trust with your distributors
By John Shauger -- Industrial Distribution, 7/1/1999
Living in both worlds as a manufacturer and distributor gives our company an interesting understanding of distribution channels. One moment I'm trying to solve a distributor's problem, and the next I'm asking a manufacturer to solve my problems.The channels of distribution are complicated, and it is all too easy for our distributors to become our competitors. The battle to prevent this competition is constant. We use frequent communication, common sense and honesty to avoid these conflicts. We also learn from the experiences our international distributors have gone through.
One of the problems that is creeping into our lives as a manufacturer is when distributors that use direct mail bill us for showing our products in their catalogs.
Some go as far as to select our products, without our knowledge, and ask us to pay for the space in their catalog. I call this taxation without representation and it gets my blood boiling. Our great country was formed because of this type of arrogance from England. While it is fair and good to work with a distributor to promote products, it is not fair for a distributor to spend my money without my permission.
Our policy is to give distributors lower product prices for larger volume, regular purchases. A few of our largest direct mail distributors have even asked for slight price increases to allow for co-op advertising of their catalogs. This type of cooperation works out well for both parties. The distributor gets its co-op advertising funds and the manufacturer gets its fair profit. In this instance, honesty and fair play are alive and well.
International business is also becoming more important for our company and has taught us about building trust and understanding.
We also sell our products to international distributors and buy products from "overseas." There is no distributor in the good old USA that faces the challenges that some of our international distributors do.
One man and his father politely asked for "terms." When I asked what kind of terms they meant, they indicated 75 days, because their shipments needed to cross borders of an unfriendly country which often delays the crossings. To think we complain if our express package is an hour late!
International distributors also must buy in container lots, plan way ahead, deal with customs, tariffs, currency exchange rates and transportation nightmares. Manufacturers need to be understanding and flexible to work with international distributors. Speaking their native language helps too.
As a manufacturer, we have found that the Asian crisis has been good for our company. Our costs have come down or at least have not increased. Asia's problems caused more competition, and that has improved service and quality.
The added competition also means Asian companies are going after new distribution channels and offering additional services such as CAD (computer aided design). We normally get requests from our distributors about product improvements and new products. Those requests turn into new product designs. These designs are sent as an attachment on e-mail to our Asian vendor, and we work together asking for their suggestions. This teamwork is built on trust and understanding.
John Shauger is the marketing manager at ERB Industries, Inc.
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