Hi Mr. Manufacturer– Distributors Usually are not Catfish

Catfish are native to North America. As you may know, catfish are bottom feeders with slick, shiny skin and no scales, often known as “Mr. Whiskers.” They prey on algae and prefer “dead stinky bait” rather than better, live alternatives. They feed through the night and may be predators. Most are sleek and quick, however many have now been proven to grow over 50 pounds. Catfish known as Bull Heads are much more of a scavenger and prey on decaying organic matter. Bull Heads aren’t the fighters that Channel Catfish are and become a less strenuous catch.

Some manufacturers may think of their distributors in the same vernacular. They may believe distributors are slick, quick, and eager to prey on the almighty dollar. They say distributors “bottom-feed” on rebates, discounts and special promotions, preferring lowered prices (i.e., dead stinky bait) in place of the effort of selling value. Manufacturers believe some distributors have cultivated large and lazy, demonstrating the “Cadillac and Boat” syndrome. “I’ve all I want, a Cadillac and my bass boat, why break my neck trying to recapture much more market share?”

After spending significantly more than 35 years in the distribution business, I must admit that I’ve come across a couple of distributors who fit that description. But they are the exception, not the rule. Most distributors work quite difficult, and are honest and loyal with their manufacturer. They recognize that they are only just like the support they receive from their manufacturer. But additionally they recognize the reciprocal nature of the relationship. Quite simply, the more support that distributors give manufacturers through investments in market share growth, then the more support they’ll receive from the manufacturer.

Distributors provide tremendous value. Most manufacturers appreciate this and will openly admit it, while some achieve this begrudgingly. Manufacturers who truly operate in a partnership relationship not just acknowledge the distribution value, however they seek to leverage that value at every opportunity. What value does distribution provide? The worth may vary by industry and product, but it includes some or even all the following:

Some manufacturers don’t acknowledge this value openly and live in a “Love-Hate” relationship with their distributors. They can’t live with ’em and they can’t live without ’em. Obviously it’s true a few distributors deserve this negative opinion. There are those individuals who have made fortunes simply because they had products with exceptional brand equity in exclusive or selective territories that required simply answering the device to have rich. A few of these distributors have failed to reinvest in their business, putting personal needs in front of business needs. Proper the conclusion of the item life cycle nears and leading edge distribution is needed for new service introduction and support, the commitment, desire and competence on the distributor level is usually lacking. These circumstances just fuel the fire of manufacturers’ low opinion of distribution. Fortunately we believe these scenarios make-up just a small minority, so we have to work to change any negative generalizations.

Different Perspectives

We should recognize that there’s an alternative business mindset between the distributor and the manufacturer. By understanding both perspectives better, each party can work toward an improved partnership relationship. The manufacturer prefers to truly have a contract with point-of-sales information. Their contract would state, you can do “this,” and in the event that you don’t, “these” are the consequences, and in addition, our deal may be cancelled with a thirty-day notice. On the other hand, the distributor prefers a partnership covenant that says if you do “this,” we can do “that,” and together we will grow market share.

Naively, throughout a lot of my distribution career, I believed that I was a person of the manufacturer. I bought their product and resold it. I didn’t comprehend the thought of not being their customer until 1998. I was two months on the work as COO of a $400 million distributor. The first time I met our major supplier, a supplier of pumps, it had been at a cocktail party. I was talking to their Vice President of sales. I’d done my homework and knew our company was on the top ten account list as we had purchased over $45 million dollars of product from their store the season before. I made a review to this Vice President about our company taking pride in being certainly one of their top ten customers. I expected at the very least a laugh, kudos, or just a grateful nod. He looked at me in disbelief and with a fairly firm, arrogant voice said, “Rick, you’re not a customer-you are a vendor!”

During the time I was offended by his attitude but have since come to realize that in the eyes of the manufacturer, distributors aren’t customers. They are just a link in the supply chain. Ideally, they are channel partners. Manufacturers have huge capital demands to cover high fixed costs. Their call to continually increase market share is important, yet distributors sometimes get frustrated with the volume-driven needs of the manufacturers.

Increasingly, manufacturers have little choice but to explore all opportunities to recapture market share, and distributors can be just one vehicle in the supply chain. Many manufacturers even look for the chance to service some major customers direct. Transactional those sites on the Internet are playing an ever-increasing role in the supply chain. Include manufacturers’ reps, integrators and catalog houses, and you begin to understand the confusion and noise that could exist because of the numerous channels. This could and often does frustrate distributors. They rely on themselves and prefer market exclusivity – a phenomenon that is dying off in many industries.

What keeps the Distributor up through the night?

Distributor rationalization is now a warm topic in several manufacturer executive staff meetings across North America. Most manufacturers believe they’ve way too many distributors. Mass retail complicates this situation and working with the service demands of the big 총판모집  box retailers remains a significant headache for the manufacturer. If a supplier sat down today and designed his distribution model from scratch, chances are very high that few would retain their existing channel structure. Distributors know this and often feel threatened by it.

However, just like profit covers many sins, performance covers most frustrations. Manufacturers like big purchase orders, increased sales and market share growth. Distributors like exclusivity, rebates, co-op funding, technical support and innovative, creative manufacturing partners. When both partners get what they need, it’s a match produced in heaven, and matches similar to this do exist. However, a lot more require constant nurturing. Both partners need to work on it.

Distributors and manufacturers often disagree on what’s crucial that you the customer. Distributors believe the manufacturer is out of touch and the manufacturer believes the distributor isn’t providing adequate coverage and developing market intelligence. Manufacturers believe the intelligence that distribution does gather is highly biased.

Manufacturers notice that channel rationalization could be a a valuable thing because of their long-term relationships with distributors who are willing to be true partners and operate within the bounds of what is good for both. A garden can’t flourish without pulling the weeds. The secret is to catch the “catfish” in the rationalization process, rather than the productive distributor partner.

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