Hi there Mr. Manufacturer– Distributors Are usually not Catfish

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

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

After spending significantly more than 35 years in the distribution business, I must admit that I have run into several distributors who fit that description. But they are the exception, not the rule. Most distributors work very difficult, and are honest and loyal to their manufacturer. They recognize that they are only just like the support they receive from their manufacturer. But they also recognize the reciprocal nature of the relationship. Put 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 understand this and will openly admit it, however 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 value may vary by industry and product, but it contains some if not every one of 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 deal with ’em and they can’t live without ’em. Needless to say it’s true that the few distributors deserve this negative opinion. You can find those people 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 have rich. Some of these distributors have didn’t reinvest inside their business, putting personal needs before business needs. Then when the conclusion of the item life cycle nears and innovative 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 constitute only a small minority, so we must work to alter any negative generalizations.

Different Perspectives

We should recognize that there surely is an alternative business mindset between the distributor and the manufacturer. By understanding the 2 perspectives better, each party can perhaps work toward an improved partnership relationship. The maker prefers to really 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 results, and in addition, our deal could be cancelled with a thirty-day notice. On another 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 much of my distribution career, I thought 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 job as COO of a $400 million distributor. The very first time I met our major supplier, a manufacturer of pumps, it was at a cocktail party. I was conversing with their Vice President of sales. I had done my homework and knew our company was on their top ten account list as we had purchased over $45 million dollars of product from their website the entire year before. I made a comment to the Vice President about our company taking pride in being one of their top ten customers. I expected at the very least a laugh, kudos, or just a grateful nod. He looked over me in disbelief and with a fairly firm, arrogant voice said, “Rick, you are not a customer-you are a distributor!”

During the time I was offended by his attitude but have since come to understand that in the eyes of the maker, distributors aren’t customers. 총판커뮤니티  They are 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 fully capture market share, and distributors can become just one vehicle in the supply chain. Many manufacturers even search for the opportunity to service some major customers direct. Transactional the websites on the Internet are playing an ever-increasing role in the supply chain. Add manufacturers’ reps, integrators and catalog houses, and you begin to know the confusion and noise that will exist as a result of 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 lots of manufacturer executive staff meetings across North America. Most manufacturers believe they’ve a lot of distributors. Mass retail complicates this case and coping with the service demands of the big box retailers remains an important headache for the manufacturer. If a manufacturer sat down today and designed his distribution model from scratch, chances 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 made in heaven, and matches similar to this do exist. However, additional require constant nurturing. Both partners need certainly to work on it.

Distributors and manufacturers often disagree on what is vital that you the customer. Distributors believe the maker has gone out of touch and the maker 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 positive thing for their long-term relationships with distributors who’re 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 secret would be to catch the “catfish” in the rationalization process, rather than the productive distributor partner.

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