Vendor consolidation is a reality. Combine it with supply chain and distributor consolidation, and the fact that more than 50 percent of goods and services offered to U.S. end users originate from outside the United States, and it's easy to lose sight of the bigger picture.

There is much more to manufacturer consolidation than meets the eye. Distributors should not immediately discount smaller manufacturers that have provided years of personalized service. A great relationship adds value that cannot be replicated by the impersonal super-giant supplier.

Smaller vendors are often better at providing personalized service, unique products, competitive pricing and quick delivery. The smaller manufacturer often times puts a higher priority on assisting the distributor in differentiating himself from the competition. The super-giant vendors, on the other hand, are often caught up in their own bureaucracy and are unable to quickly and efficiently get competitively priced product into the supply chain.

A growing number of small, family-owned or independently operated manufacturers are combining forces to provide impeccable service. They are joining together to hire world-class, third-party logistics companies to handle shipping and warehousing. They're re-dedicating themselves to product and service innovation. And they're doing all this without compromising personal relationships with customers.

On the surface it appears that smaller manufacturers are at a disadvantage as companies consolidate and get larger. But opportunities exist. Smaller manufacturers are much quicker and more agile in making business decisions. They are not adverse to customization. And they provide added value in ways that large companies simply cannot — with personal, one-on-one relationships.

Small manufacturers tend to focus on end users, trying to understand their issues and problems and then attempting to find solutions for them. This is in sharp contrast to larger manufacturers, who tend to put more emphasis on the products they're currently manufacturing than on their end users' needs. It's the difference between having a market-served business philosophy and a product-served philosophy.

Most large vendors spend about 80 percent of their time with the top five percent of their customer base. The same large manufacturers would be hard pressed to explain how this tactic supports distributors in their own battles with consolidation and competitiveness.

Publicly traded manufacturers are under tremendous pressure — not only from each other and from within, but also from the market and shareholders — to continually improve profit performance. In the process, compromises have to be made. Quality, manufacturing, design, and product offering are often affected. As the cost of raw materials, labor, goods and services continues to rise, something has to give in order for them to continue to improve.

A savvy purchasing agent understands the importance of resisting the temptation to buy at the lowest price and sacrifice the service and benefits that come from dealing with smaller manufacturers.

As buyers are faced with the need to reduce their base of independent suppliers, they should ask their better manufacturers to consider expanding their product line. Distributors might be surprised to discover that smaller manufacturers are willing to support them in this way. And they might be even more surprised to find out just how competitive small manufacturers can be when doing so. m