Working in harmony

Commitment, balance and communication are the keys to teamwork

By -- Industrial Distribution, 2/1/2001

After 20 years in the industrial supply manufacturing industry, I sometimes catch myself talking about the 'good old days' when manufacturers used a single marketing strategy for the entire nation and partnered with relatively few distributors. During the '80s and early '90s, consumers were focused on quality improvement and lean manufacturing, but left supply channel decisions to their suppliers. The relationships between manufacturers and distributors were simple, trust and commitment rarely being questioned by either partner.

But today's customers insist on purchasing products through the channel of their choice, thus forcing manufacturers and distributors into many more alliances, including partnerships with competing distributors on a 'named account' basis.

Though satisfying the various partnerships can be challenging, if managed properly they can result in new opportunities.

It starts with your own people. Most field salespeople develop friendships beyond normal business relationships with their prime distributor partners. This strong personal bond, combined with the convenience of dealing with a trained, knowledgeable partner will always favor existing distributors over newcomers. Given that, it's understandably difficult for salespeople to form new partnerships upon customer demand. And when you first enter into a relationship, your new partner is likely to perceive you as just one of many distributors or manufacturers offering like products or value-added services.

The foundation for any successful relationship is a clear commitment, a shared understanding of exactly what you are willing to give and what you expect in return. Unfortunately, in many cases more emphasis is put on completing the formal distributor application and credit references than on the contributions each partner is willing to make.

Today's competitive environment does not allow time for gradual discovery of amiable or impeding attributes of your partner, and distributor policies written by attorneys generally address only the legal framework of the relationship.

I strongly recommend creating a separate, less formal list stating your specific expectations. If you are entering into a single account relationship, the value-added functions expected by the customer must be determined and clearly assigned. In cases of a broader cooperation, training programs, joint activities and the establishment of benchmarks and review dates need to be covered.

The second and equally important component for a successful partnership is balance. The goal is equality over time rather than in any individual event. New customer acquisition costs and potential benefits should not become confused with existing account margin expectations and functional duties. You will be remembered for the things you give rather than the rewards you reap.

Maintaining a mutually beneficial relationship is an even bigger challenge. Harvard professor Theodore Levitt wrote in "The Marketing Imagination," that "The natural tendency of relationships, whether in marriage or in business is entropy-the erosion or deterioration of sensitivity and attentiveness."

At Hermes Abrasives, we perform an annual review with our key distributors based on a joint business plan that shows past purchases versus plan by product group, customer and industry SIC codes. The new products and programs section, along with target industry information, quickly sparks new plans. Regular, open communication not only clears the air but, more importantly, instills trust and confidence leading to true lasting teamwork instead of irreconcilable differences.

Hardy Hamann is senior vice president of Hermes Abrasives, Ltd. and second vice president of the American Supply & Machinery Manufacturer's Association.