Hello Mr. Manufacturer– Distributors Aren’t 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 at night and may be predators. Most are sleek and quick, however many have been known 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 an easier catch.

Some manufacturers may consider their distributors in the exact same vernacular. They could 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) as opposed to the effort of selling value. Manufacturers believe some distributors have become large and lazy, demonstrating the “Cadillac and Boat” syndrome. “I have all I want, a Cadillac and my bass boat, why break my neck trying to fully capture much more market share?”

After spending a lot more than 35 years in the distribution business, I must admit that I have run into a couple of distributors who fit that description. But they are the exception, not the rule. Most distributors work very hard, and are honest and loyal with their manufacturer. 총판커뮤니티  They recognize that they’re only as good as the support they receive from their manufacturer. But they also 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 understand why and will openly admit it, although some do so begrudgingly. Manufacturers who truly operate in a partnership relationship not merely acknowledge the distribution value, however they seek to leverage that value at every opportunity. What value does distribution provide? The worth can vary by industry and product, but it provides some if not all the following:

Some manufacturers don’t acknowledge this value openly and are now living in a “Love-Hate” relationship using their distributors. They can’t live with ’em and they can’t live without ’em. Obviously it’s true that a few distributors deserve this negative opinion. You can find those individuals who have made fortunes simply because they had products with exceptional brand equity in exclusive or selective territories that required nothing more than answering the telephone to get rich. Some of those distributors have failed to reinvest inside their business, putting personal needs before business needs. When the end of the merchandise life cycle nears and leading edge distribution is required 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 a different business mindset between the distributor and the manufacturer. By understanding the 2 perspectives better, each party can perhaps work toward a better partnership relationship. The maker prefers to truly have a contract with point-of-sales information. Their contract would state, you is going to do “this,” and in the event that you don’t, “these” are the consequences, and incidentally, our deal may be cancelled with a thirty-day notice. On one other hand, the distributor prefers a partnership covenant that says should you “this,” we is going to do “that,” and together we will grow market share.

Naively, throughout much of my distribution career, I believed that I was a customer 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 company of pumps, it absolutely was at a cocktail party. I was speaking with 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 website the year before. I made a comment to the Vice President about our company taking pride in being among their top ten customers. I expected at the very least a smile, kudos, or perhaps a grateful nod. He looked at me in disbelief and with a fairly firm, arrogant voice said, “Rick, you’re not really a customer-you are a provider!”

At the time I was offended by his attitude but have since come to appreciate that in the eyes of producer, 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 these manufacturers.

Increasingly, manufacturers have little choice but to explore all opportunities to fully capture market share, and distributors may become just one vehicle in the supply chain. Many manufacturers even seek out the opportunity to service some major customers direct. Transactional those sites on the Internet are playing an ever-increasing role in the supply chain. Add in manufacturers’ reps, integrators and catalog houses, and you begin to understand the confusion and noise that could exist as a result of numerous channels. This may and often does frustrate distributors. They believe in themselves and prefer market exclusivity – a phenomenon that is dying off generally in most industries.

What keeps the Distributor up at 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 coping with the service demands of the big box retailers remains a major headache for the manufacturer. If a company sat down today and designed his distribution model from scratch, odds are quite 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 want, it’s a match manufactured in heaven, and matches like this do exist. However, many more require constant nurturing. Both partners need to work on it.

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

Manufacturers recognize that channel rationalization can be quite a positive thing for their long-term relationships with distributors who’re 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 key is to catch the “catfish” in the rationalization process, rather than the productive distributor partner.

Leave a Reply

Your email address will not be published. Required fields are marked *