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It's about partnerships

Calling themselves "partners" is easier said than done for manufacturers and distributors

By Ken Hale -- Industrial Distribution, 7/1/2006

There's always been plenty of discussion about the relationship between distributors and manufacturers. The talk generally centers on the difficulties in building a partnership. But it's difficult, if not impossible, to have a partnership when both partners want to be in charge.

But is there really a need for a partnership? If neither distributor nor manufacturer sees any gain from collaboration, then it is simply a waste of valuable time and effort.

I think all the talk of partnerships is overrated and that conflict in the distributor-manufacturer relationship is normal, expected, and even healthy.

I'm suggesting that instead of focusing on partnerships, we agree to disagree—and then focus on building tactics and strategies to meet goals and objectives that are mutually beneficial.

I've worked on both sides of this fence. Whether as a manufacturer's rep or a distributor salesman, when individual sales goals and objectives were at cross purposes, there was conflict. Problems usually arose when we were going in the direction our employer had set for us, and it conflicted with the course being taken by the other.

Instead of building compromises in the pursuit of partnerships, why not build a strong strategic relationship around a profit motive?

Manufacturers and distributors often compete for the same business. A typical example is when a manufacturer is pursuing new opportunities at a large end-user account where the distributor has already installed a sizable amount of business with a competing line.

From the distributor's perspective, that's his account and his business. From the manufacturer's side, it equals potential new business. Both are right. But what is lost in the dispute is the cooperative profit motive.

I've always found the best way to grow sales and maintain profits is by putting and keeping the customers' needs first. If both manufacturer and distributor can agree to do what is best for the customer, there is no basis for a conflict.

Customers should always have the best tool for the job. Manufacturers should know in what applications and what conditions their products provide superior performance over their competitors, and they should focus their efforts accordingly.

Distributors should also be responsible for some level of experience and knowledge concerning the performance of a manufacturer's product line. The problem is that both parties want to pursue every opportunity available, even if it wastes the customer's time.

Here are some simple rules I've found helpful when dealing with strategic business allies:

  • Rule #1: The customer is the first priority.
  • Rule #2: Profit is the second priority.
  • Rule #3: Both distributors and manufacturers will be open and honest with the other about their company's goals and objectives.
  • Rule #4: Conflict is part of the business progress. It is acceptable not to do business together in certain areas and in pursuit of individual objectives.

These rules are not going to resolve conflict, but if a distributor and manufacturer can at least agree on the rules of engagement, the areas of conflict might be reduced.

If a primary agreement is reached on the importance of keeping the customer first, then profit will follow—and maybe the rest will fall into place.


Author Information
Ken Hale is the director of sales and marketing at Tungaloy America, Inc. in Wood Dale, Ill. Contact him at khale@tungaloy.com

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