Distributors evaluate their buyers
By Jack Keough -- Industrial Distribution, 10/1/1999
Although there have been major strides made in the distributor-buyer relationship, that relationship, in most cases, remains adversarial. And communication may be at the heart of the problem.That is one of the results of an exclusive ID report (p.80) in which we surveyed some 200 distributors from across the country asking them to evaluate their purchasing counterparts. This study is a follow-up
report to one conducted by Purchasing magazine, a sister Cahners publication, asking their readers to evaluate their distributors. Overall, our study shows that distributors give buyers decent marks, but point out there is still plenty of room for improvement, specifically as it relates to understanding the costs of providing value-added services.
What is clear, however, is that purchasing professionals rely on distributors for more services. Nearly three-quarters of the respondents say buyers are looking for distributors to provide more technical support and training. And 58 percent note that buyers are outsourcing functions such as inventory management, order processing, and training/education.
This means that there are many more opportunities for distributors to become an integral part of a customer's buying program.
So why isn't the relationship closer? Part of the problem may lie with distributors themselves, who often focus on selling a product solely on price rather than total cost. Buyers have told us in the past that distributors are too quick to tell them that "their price is cheaper than the other guy." They add that distributors must be more innovative and creative in solving problems. Think for a moment. Most new programs in recent years, whether systems contracts, vendor managed inventory, or integrated supply, have come from buyers.
It is true that some buyers will continue to buy solely on price. And that may mean that distributors may have to walk away from business.
But at the same time distributors must establish new relationships with buyers by convincing them that it is in the buyer's best interest to do business with them because it will mean lower total costs for their company. Before that can happen, distributors must have a solid understanding of what their costs are and be able to document savings for their customers.
It is likely that an adversarial relationship will always exist between the two groups. Distributors can still manage that relationship and be profitable. It's happened before and will happen again.
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