Catfish are native to North America. As you may know, catfish are bottom feeders with slick, shiny skin and no scales, often referred to as “Mr. Whiskers.” They feast upon algae and prefer “dead stinky bait” as opposed to better, live alternatives. They feed during the night and can be predators. Most are sleek and quick, however, many have already been known to grow over 50 pounds. Catfish referred to as Bull Heads are even more of a scavenger and feast upon 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 might believe distributors are slick, quick, and eager to feast upon 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 work of selling value. Manufacturers believe some distributors have become large and lazy, demonstrating the “Cadillac and Boat” syndrome. “I’ve all I need, a Cadillac and my bass boat, why break my neck trying to recapture even more market share?”
After spending a lot more than 35 years in the distribution business, I must admit that I’ve come across several distributors who fit that description. But they’re the exception, not the rule. Most distributors work very difficult, and are honest and loyal to their manufacturer. They recognize they are only just like the support they receive from their manufacturer. But in addition 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 will receive from the manufacturer.
Distributors provide tremendous value. Most manufacturers understand this and will openly admit it, though some achieve this begrudgingly. Manufacturers who truly operate in a partnership relationship not merely acknowledge the distribution value, but they seek to leverage that value at every opportunity. What value does distribution provide? The worth can differ by industry and product, but it provides some or even all of 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. Needless to say it’s true that a few distributors deserve this negative opinion. You can find those individuals who have made fortunes since they had products with exceptional brand equity in exclusive or selective territories that required simply answering the telephone to have rich. Some of these distributors have didn’t reinvest in their business, putting personal needs in front of business needs. Then when the finish of the merchandise 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 frequently 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 must work to change any negative generalizations.
Different Perspectives
We must recognize that there surely is a different business mindset between the distributor and the manufacturer. By understanding the 2 perspectives better, each party could work toward a greater partnership relationship. The maker prefers to 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 results, and by the way, our deal can be cancelled with a thirty-day notice. On another hand, the distributor prefers a partnership covenant that says should you choose “this,” we is going to do “that,” and together we shall grow market share.
Naively, throughout much of my distribution career, I thought that I was a customer of the manufacturer. I bought their product and resold it. I did not comprehend the concept 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 was at a cocktail party. I was talking to their Vice President of sales. I had done my homework and knew our company was on the top ten account list as we’d purchased over $45 million dollars of product from them the season before. I made an opinion to the Vice President about our company taking pride in being among their top ten customers. I expected at the very least a look, kudos, or perhaps a grateful nod. He viewed me in disbelief and with an extremely firm, arrogant voice said, “Rick, you are not a customer-you are a supplier!”
At the time I was offended by his attitude but have since come to understand that in the eyes of producer, distributors are not customers. They’re simply a link in the supply chain. Ideally, they’re channel partners. Manufacturers have huge capital demands to cover high fixed costs. Their call to continually increase market share is vital, yet distributors sometimes get frustrated with the volume-driven needs of their manufacturers.
Increasingly, manufacturers have little choice but to explore all opportunities to recapture market share, and distributors can become just one single vehicle in the supply chain. Many manufacturers even search for the opportunity to service some major customers direct. 총판모집 Transactional the web 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 know the confusion and noise that will exist due to the numerous channels. This can and often does frustrate distributors. They believe in themselves and prefer market exclusivity – a phenomenon that is dying off in most industries.
What keeps the Distributor up during the night?
Distributor rationalization is becoming a warm topic in many manufacturer executive staff meetings across North America. Most manufacturers believe they have a lot of distributors. Mass retail complicates this example and working 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 as 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, tech support team and innovative, creative manufacturing partners. When both partners get what they want, it’s a match produced in heaven, and matches like this do exist. However, additional require constant nurturing. Both partners have to just work at it.
Distributors and manufacturers often disagree on what’s vital that you the customer. Distributors believe producer is going 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 know that channel rationalization can be quite a good thing for their long-term relationships with distributors who are prepared to be true partners and operate within the bounds of what will work for both. A garden can’t flourish without pulling the weeds. The key is to catch the “catfish” in the rationalization process, as opposed to the productive distributor partner.
