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 called “Mr. Whiskers.” They prey on algae and prefer “dead stinky bait” rather than better, live alternatives. They feed at night and may be predators. The majority are sleek and quick, however, many have now been proven to grow over 50 pounds. Catfish called Bull Heads are even more of a scavenger and prey on decaying organic matter. Bull Heads are not the fighters that Channel Catfish are and become a simpler catch.

Some manufacturers may consider their distributors in exactly the same vernacular. They could believe distributors are slick, quick, and wanting 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 hard work of selling value. Manufacturers believe some distributors have become large and lazy, demonstrating the “Cadillac and Boat” syndrome. “I have all I need, a Cadillac and my bass boat, so why break my neck trying to capture even more market share?”

After spending more than 35 years in the distribution business, I must admit that I have encounter several distributors who fit that description. But they are the exception, not the rule. Most distributors work very hard, and are honest and loyal to their manufacturer 총판 . They recognize that they’re only as effective 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 your more support they will receive from the manufacturer.

Distributors provide tremendous value. Most manufacturers appreciate this and will openly admit it, even though some do so 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 value can 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 using their distributors. They can’t deal with ’em and they can’t live without ’em. Needless to say it’s true that the few distributors deserve this negative opinion. There are those individuals who have made fortunes since they had products with exceptional brand equity in exclusive or selective territories that required only answering the device to obtain rich. Many of these distributors have didn’t reinvest in their business, putting personal needs ahead of business needs. Then when the conclusion of the product life cycle nears and cutting edge distribution is needed for new product 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 only a small minority, so we have to work to change any negative generalizations.

Different Perspectives

We should recognize that there surely is a different business mindset involving the distributor and the manufacturer. By understanding both perspectives better, each party can perhaps work toward a greater partnership relationship. The maker prefers to have a contract with point-of-sales information. Their contract would state, you can do “this,” and if you don’t, “these” are the consequences, and by the way, our deal may be cancelled with a thirty-day notice. On one other hand, the distributor prefers a partnership covenant that says should you choose “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 did not comprehend the thought of not being their customer until 1998. I was 8 weeks on the work as COO of a $400 million distributor. The very 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 their top ten account list as we’d purchased over $45 million dollars of product from their website 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 least a laugh, kudos, or simply a grateful nod. He looked over me in disbelief and with a rather firm, arrogant voice said, “Rick, you are not really a customer-you are a vendor!”

During the time I was offended by his attitude but have since come to appreciate that in the eyes of the manufacturer, distributors are not customers. They’re merely 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 essential, yet distributors sometimes get frustrated with the volume-driven needs of their manufacturers.

Increasingly, manufacturers have little choice but to explore all opportunities to capture market share, and distributors may become only one vehicle in the supply chain. Many manufacturers even look for the ability to service some major customers direct. Transactional the websites 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 know the confusion and noise that may exist as a result of numerous channels. This can and often does frustrate distributors. They rely on themselves and prefer market exclusivity – a phenomenon that is dying off in most industries.

What keeps the Distributor up at night?

Distributor rationalization has become a warm topic in many manufacturer executive staff meetings across North America. Most manufacturers believe they have way too many distributors. Mass retail complicates this example and dealing with the service demands of the big box retailers continues to be a significant headache for the manufacturer. If a supplier sat down today and designed his distribution model from scratch, chances are high that few would retain their existing channel structure. Distributors know this and often feel threatened by it.

However, in the same way 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 fit produced in heaven, and matches like this do exist. However, a lot more require constant nurturing. Both partners need certainly to just work at it.

Distributors and manufacturers often disagree on what’s vital 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 understand that channel rationalization can be quite a a valuable thing for their long-term relationships with distributors that are ready 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 trick is to catch the “catfish” in the rationalization process, as opposed to the productive distributor partner.

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