Progressive Distributor - The glass is half full

The glass if half full

by Richard Vurva

Manufacturers and distributors continue to be at odds over key issues affecting their relationships. For evidence, I point to the long-awaited “Facing the Forces of Change: Future Scenarios for Wholesale Distribution” from the Distribution Research and Education Foundation of the National Association of Wholesaler-Distributors. The report indicates a split in opinion between manufacturers and distributors on the subject of e-business.

The study reveals several areas where manufacturers and distributors disagree. For example, more manufacturers than distributors believe the Internet can replace distributors as a way to provide product information to customers. Manufacturers expect online exchanges will generate some degree of customer loyalty by 2006, but distributors express doubts that online exchanges will ever attract customers.

A second report comes from the Industrial Performance Group of Northfield, Ill. Called “Report Card Update,” it is a follow-up to a study first conducted four years ago. It found that working relationships between manufacturers and distributors may be at an all-time low. Both sides agree that sales performance and profitability are being negatively impacted by problems in their working relationships, and that high-quality, two-way communication between channel partners is virtually non-existent.

It’s easy to look at the results of the two studies and throw up your hands in surrender. Manufacturers and distributors are doomed forever to disagree. If you take that view, however, you’re looking at the glass as half empty.

The authors of the two reports take a more positive approach.

In an article that begins on page 26, Adam Fein of Philadelphia-based Pembroke Consulting, the primary author of the Facing the Forces of Change report, suggests that the disparity of opinion between distributors and their suppliers can be viewed as an opportunity for forward-thinking distributors.

Similarly, IPG’s Robert Nadeau says the Report Card points out tremendous opportunities for both parties to improve sales performance and profitability.

“Some manufacturers and distributors will do a better job of using this information and in making positive changes. That’s the nature of competition,” he says.

In other words, differences of opinion between channel partners are not necessarily bad, provided that they lead to meaningful dialogue.