There is a good news/bad news scenario in the results of a study (p. 52) on how purchasing executives view industrial distributors. The good news is that slightly more than half of the purchasing executives who responded to a survey by Purchasing magazine, a sister publication of ID, say they are buying more MRO products from distributors than they did five years ago. About 40 percent are buying fewer MRO supplies.

Still, there are problems. Buyers claim that distributors fail to promote value-added services and sell on price. That comment should send chills down the spines of industrial distributors who are striving to promote — and document — the supposed valued-added services they provide to customers.

Also in the study, nearly 73 percent of buyers rated distributor performance as "good," up sharply from 53 percent reported in a 2002 survey. However, only 3.4 percent of the respondents rated their distributors as excellent, down from 13.5 percent.

And when asked how distributors could make their lives easier, buyers said they should offer consistent quality, good follow-up, and deliver products on time.

ID recently conducted a study in which we asked distributors what buyers can do to help lower prices and improve services. The results are part of our 57th Annual Survey of Distributor Operations, which will be published next month. Distributors told us that buyers must better communicate their needs and expectations, forecast demand better, increase the volume of purchases to reduce transportation costs, plan usage requirements better, and focus on overall cost, not price.

It's interesting to examine how buyers and distributors view one another. Distributors say purchasing people aren't willing to pay for value-added services. Buyers say that's not true and that distributors often focus on the price of the product, rather than the total cost.

What is true, however, is that distributors must ultimately prove their value and become an indispensable partner with buyers to lower transactional costs. The problem is that, in many cases, distributors think of value added in their own terms, not in terms of the customer. That's an important distinction. Both groups say they want to enter into a partnership with each other. The question is, can that be done?

Jack Keough EDITOR/ASSOCIATE PUBLISHER jkeough@reedbusiness.com