Leading distributors attract leading manufacturers

by Neil Gillespie and Dave Gordon

Do you act like a market leader with supplier planning activities? Do your manufacturers help you create a competitive difference, or do you and your customers view your manufacturers as "commodity providers?"

Having the right manufacturers in the eyes of your customers and getting the right support makes all the difference between maintaining your market position and growing your business profitably.

If you don't have the right set of manufacturers, you are handicapped. The people that put "Dad" in business may no longer be in the business. You need to ensure you're not operating on a dead set of premises. You may need to do something to set change in motion.

Leading distributors actively develop strong manufacturer relationships with strong planning activities.

Everyone talks about partnership, working together and continuous communication, but top-performing distributors drive the process: They set expectations of their manufacturers and the manufacturer's sales force. Then they work with the manufacturer to deliver results in the field.

Once you get a reputation for doing this among manufacturers, the snowball starts rolling. Start planning like a market leader and attract market leaders.

Evaluate your suppliers
Has the market changed since you last decided to do business with a supplier?

Review your supplier relationships periodically. Consider your primary product category and ask, "Are they still our best solution for our customers?"

Why? Because things change. While there may not be many significant new products introduced, people change, new services come along, your customers' perception of the manufacturer may have changed and the market may have become saturated with too much distribution. A competitive analysis can help identify this.

You owe it to yourself to ensure that your relationship is not taken for granted. Here's how:

Conduct a competitive analysis
Who else in your market does the manufacturer support? Are there too many distributors selling the brand? Does it cause undue price competition? Are there any major accounts left to pursue in the market with the brand?

Talk to your staff
Do they receive the support that you desire? Ask your people to rate your supplier's performance and the quality of the people doing the planning with you.

Listen to your colleagues
Talk to other distributors. What do they say about competing manufacturers?

Interview manufacturers
Develop a relationship. Ask them to discuss their company's capabilities and what differentiates them. Remind them, and your current supplier, that you are reviewing the product category and may, or may not, make changes that will help you take market share in their product category.

Obtain customer input
Talk to key customers. Do they have a preference? Do they care?

Consider the financial ramifications
Your goals and your marketing group's goals may differ. You earn money by selling manufacturers’ products, not warehousing them. Comparable rebate programs are available from companies that do not participate in the groups.

Make the process as objective as possible
Identify a set of criteria that are important to you and grade each manufacturer on each criterion. Leave room for subjectivity (this is a relationship business), but the golf game may not be the right answer for your company.

The bottom line
Choose the suppliers that have the tools to help you drive your business. Planning with suppliers, and their sales forces, is an ongoing adventure.

If you are a large distributor, chances are your planning with key suppliers is pretty good because senior management from the manufacturer got involved.

Mid-sized distributors experience the good, bad and ugly of planning. The quality is determined by the salesperson's knowledge of their company's initiatives, the relationship that the distributor has with the manufacturer's senior management and the importance of the distributor in the marketplace.

Smaller distributors may have to compete to spend time with a manufacturer rep whose desire could be questioned, unless there is something in it for the rep.

Supplier marketing planning improved over the past five to seven years with marketing groups providing a framework to encourage planning. But market share leaders take planning to the next level, committing the time, setting expectations of the manufacturer, taking control of the process, knowing what to ask and providing continuous follow-up (and feedback) to ensure that the plan is implemented or revised.

A plan that is not implemented and monitored is worse than no planning at all, because it wastes your time.

Your commitment is the key to the planning process. It's essential to selecting the right suppliers to work with. Market leaders attract market leaders.

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