Recently I had the opportunity to meet with a principal of one of the marketing groups serving the industrial supply channel. Over the last few years a number of such new groups have coalesced around issues unique to their member interests and concerns. Coinciding with this trend has been a general consensus on behalf of both manufacturers and distributors that product line consolidation is desirable, both for end users and distributors. Interestingly, this trend is not unique to the industrial channel.

Participating in the welding and contractor channels in addition to the industrial, we find this desire to consolidate suppliers a common thread. With the difficult economic environment over the last 18-24 months, particularly in the industrial channel, the talk of consolidation has developed an even more urgent tone. Indeed, it has become the focal point of many groups annual meetings or marketing efforts. Not surprisingly, manufacturers look at this as an opportunity to gain market share with these distributors.

Unfortunately for both manufacturers and distributors, all too often the transition from desire to execution falls short. On the one hand manufacturers assume vendor consolidation is so compelling that the execution should be fairly straightforward. Needless to say, this is naïve and doesn't take into account the varying forces affecting the distributor: vendor relationships, end-user preferences, existing inventories, and a host of other concerns.

On the other hand, while distributors are frequently the most outspoken about the need for this consolidation, they often have a difficult time delivering the consolidation to their vendors that they agree would be beneficial. When the consolidation stalls, manufacturers often hear "we've carried brand X for so long we can't make the switch", "our sales representatives don't want to go through the hassle of the change", or other related objections.

Increasingly, in reaction to the difficulty of executing line conversions either at the distributor or end-user level, some marketing groups have adopted the tactic of inviting additional manufacturers into the group, even though multiple vendors exist within the particular product category. In some cases, the addition of new vendors occurs without any review with existing suppliers. As a result, charter member manufacturers of the groups find their sales efforts blunted further, the vendor's importance diluted, the integrity of the program is called into question, and worse, manufacturers begin to question the value of their participation in some groups altogether.

Our experience has been that the marketing groups who diligently press consolidation and support of existing vendors find significant support from their vendors and superior growth. This has not been the case with those groups that haven't stressed the execution side of vendor consolidation or who have taken the approach of adding new vendors to the point of having five or six suppliers per product category.

When times are good, it's easy to postpone difficult decisions related to line consolidation or supporting committed distribution. Current market conditions present the best opportunity for both manufacturers and distributor marketing groups to rededicate themselves to the stated reasons for participating in and with such groups.