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The strongest link

Distributors play an increasingly important role in the "value chain"

By William Schwartz -- Industrial Distribution, 10/1/2001

The Kaizen management philosophy of continuous improvement has been transforming factory floor routines for the past generation. For the companies and customers involved in this revolution, the boosts in productivity have been dramatic. The results from this Japanese-inspired concept of lean manufacturing are reduced manufacturing costs and greater responsiveness to change and customer needs.

As one of the country's leading Kaizen consultants, we've put these ideas into practice by acquiring manufacturing companies of our own. Our portfolio, which includes material handling equipment manufacturers PrestoLifts, Blue Giant and Long Reach, has put us right on the front line.

To achieve the improvements Kaizen promises takes intensive concentration. Yet these benefits cannot happen from us alone. To deliver a specific product, with specific capabilities, within a specific price and time, we recognize that our distributors complete what is referred to as the "value chain."

The value chain is the vehicle that delivers improved customer service, with the links made up of manufacturers and distributors. The goal: waste is reduced, value added. The steps lean manufacturers take to make these changes require the distributor buying into the relationship, as well:

Define value from the perspective of the end customer. One of the givens in marketing is that customers are typically more source loyal than brand loyal. This trust users have in their local distributor puts the distributor in an ideal spot as a conduit of information about customer needs and problems.

Identify the entire value stream and eliminate waste. For suppliers, lean manufacturing is the means to eliminate waste at every step in their processes. Distributors have opportunity as well to eliminate waste — order entry errors, product rework, shipping problems, etc. — leading to lean distribution.

Make the value-creating steps flow. Within the Kaizen philosophy, time equals waste. Every step can be examined and improved throughout all stages of the customer relationship, including product development, production and shipping. The steps can be linked together to create the seamless flow of products and, most of all, information leading to process refinements.

Design and provide only what the customer wants, only when the customer wants it. Today everyone wants to drive down inventories. Distributors must be keenly attentive to how their customer does business.

Pursue perfection. The Kaizen approach sets a company on a course of continuous improvement. The concept becomes a way of life as everyone involved in the value chain is challenged to find ways to cut waste. In the process, customers turn their focus away from saving a dime or two, towards sources that provide the greatest ongoing value.

Putting these steps into action calls for change in the way manufacturers and distributors do business. The level of trust needs to be higher and the walls need to come down for the chain to exist. Traditional business relationships need to evolve into partnerships.

The times demand this type of thinking. The answer for positive and mutual growth is a network of lean manufacturers represented by lean distributors forging a value chain the customer will come to regard as unbreakable.


Author Information
William Schwartz is president of TBM Holdings based in Westport, Conn.

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