Catfish are native to North America. Since you may know, catfish are bottom feeders with slick, shiny skin and no scales, often called “Mr. Whiskers.” They feed on algae and prefer “dead stinky bait” as opposed to better, live alternatives. They feed through the night and can be predators. The majority are sleek and quick, however, many have now been recognized to grow over 50 pounds. Catfish called Bull Heads are even more of a scavenger and feed on decaying organic matter. Bull Heads are not the fighters that Channel Catfish are and become a less strenuous catch.
Some manufacturers may think of their distributors in the same vernacular. They might believe distributors are slick, quick, and desperate to feed on the almighty dollar. They say distributors “bottom-feed” on rebates, discounts and special promotions, preferring lowered prices 총판 (i.e., dead stinky bait) instead of the hard work of selling value. Manufacturers believe some distributors have grown large and lazy, demonstrating the “Cadillac and Boat” syndrome. “I have all I want, a Cadillac and my bass boat, so why break my neck trying to fully capture even more market share?”
After spending more than 35 years in the distribution business, I must admit that I have encounter 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 to their manufacturer. They recognize that they’re only as good as the support they receive from their manufacturer. But in addition they recognize the reciprocal nature of the relationship. In other words, the more support that distributors give manufacturers through investments in market share growth, then a more support they’ll receive from the manufacturer.
Distributors provide tremendous value. Most manufacturers understand this and will openly admit it, although 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 may vary by industry and product, but it contains some or even all of the following:
Some manufacturers don’t acknowledge this value openly and reside in a “Love-Hate” relationship using their distributors. They can’t live with ’em and they can’t live without ’em. Of course it’s true that the few distributors deserve this negative opinion. You will find those people who have made fortunes since they had products with exceptional brand equity in exclusive or selective territories that required only answering the device to have rich. Several of those distributors have didn’t reinvest in their business, putting personal needs ahead of business needs. When 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 constitute just a small minority, so we need to work to change any negative generalizations.
Different Perspectives
We ought to recognize that there is a different business mindset involving the distributor and the manufacturer. By understanding the two perspectives better, each party can perhaps work toward a greater partnership relationship. The maker prefers to really have a contract with point-of-sales information. Their contract would state, you will do “this,” and if you don’t, “these” are the consequences, and incidentally, our deal can be cancelled with a thirty-day notice. On one other hand, the distributor prefers a partnership covenant that says should you “this,” we will do “that,” and together we will grow market share.
Naively, throughout a lot of my distribution career, I thought that I was an individual of the manufacturer. I bought their product and resold it. I didn’t comprehend the concept of not being their customer until 1998. I was 8 weeks on the job as COO of a $400 million distributor. The first time I met our major supplier, a producer of pumps, it absolutely was at a cocktail party. I was speaking with their Vice President of sales. I had 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 them the entire year before. I made an opinion to this Vice President about our company taking pride in being among their top ten customers. I expected at the least a look, kudos, or perhaps 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 supplier!”
At the time I was offended by his attitude but have since come to appreciate that in the eyes of producer, 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 vital, yet distributors sometimes get frustrated with the volume-driven needs of the 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 search for the ability to service some major customers direct. 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 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 most industries.
What keeps the Distributor up through the night?
Distributor rationalization is now 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 situation and coping with the service demands of the big box retailers continues to be an important headache for the manufacturer. If a producer 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, 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 fit made in heaven, and matches similar to this do exist. However, a lot more require constant nurturing. Both partners need certainly to work at it.
Distributors and manufacturers often disagree on what’s crucial 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 observe that channel rationalization could be a good thing due to their long-term relationships with distributors who’re ready to be true partners and operate within the bounds of what is wonderful for both. A garden can’t flourish without pulling the weeds. The trick is to catch the “catfish” in the rationalization process, rather than the productive distributor partner.