If your business is a material handling distributorship, your sales and profits rely upon products manufactured by others. As an independent material handling business, your decisions about what products to sell and from whom to acquire them will go a long way in determining your ultimate success. Choose your material handling vendors carefully and you grow and profit. Make poor choices and your material handling business may not thrive. How do you know what to look for and when you have found it in a warehouse equipment manufacturer?Product — You need quality products at prices that allow you to make your targeted profit margin. Many vendors can provide those to you. In today’s competitive market, your customers will not be impressed if all you offer them is a low-priced product. Today your customers demand more. They often can get more from your competitor if that competitor has aligned itself with better vendors.
If you are to make a truly smart vendor selection, you will want to consider many additional points before making a commitment. What more should you be looking for in a vendor?
Awareness of Role and Limits — A worthy vendor recognizes that its product is truly “sold” only if the distributor is able to promptly resell it. Your vendor must support your resale efforts in ways that you define. It should support those efforts but not dictate terms. You need a vendor that operates at your direction as your profit partner.
Track Record of Distributor Support — You will want proof that your vendor has established successful long-term relationships with other distributors. Consider calling some of its established distributors to see how this vendor truly operates.
True Manufacturing Capability — As often as possible, you should select true manufacturers as vendors. If your vendors are high-volume distributors themselves, you must question their loyalty to you and their ability to comprehensively serve your needs. As a distributor yourself, unless you are buying from the manufacturer, you also may be paying too much.
|Using several vendors means each vendor may see your orders as small dollars and consider your account to deserve little support.|
When you deal through a master distributor, your needs often go unknown to the manufacturer. It is difficult for a manufacturer to support you through a middleman. When dealing with a master distributor, it is important to know whether what you purchase is at the core of its business. If the items you buy from the master distributor are not central and critical to its business plan, you may find its commitment to that product line and to you to be short-term and limited. Obviously, a manufacturer must be completely committed to you having long-term success with its product.
Profitability and Growth — You want a vendor that has a several-year history and a recognized name in the industry. It is more difficult to sell a line that has no name recognition. You also want your vendor to have a profitable history. It is important to make a profit while selling that product. However, unless your vendor is profitable too, it may not survive. That will leave you scrambling to find a replacement. In addition, a failing manufacturer vendor cannot afford to support your efforts.
Innovation — Does the vendor have leading-edge products or does it seem to introduce its “new” product only after everyone else has the same “new” product? Does the vendor employ talented engineers and designers? Can the vendor show you a proven record of product development with a few patents or industry awards to prove it? Does the vendor listen to your suggestions about new products? You will need product innovations to avoid falling behind.
Compliance with Regulations — If your vendors do not abide by EPA, OSHA and RoHS regulations, you may find yourself undeservedly caught up in sharing those problems. Enforcers cast a broad net. It is imperative that your vendor follow the regulations and be able to prove it to you. You should sell only products documented as safe and compliant. Seek information about the materials used in the products, the packaging and the transportation.
Marketing Support Capability — Your company cannot afford to develop marketing material for everything you sell. You may not have the art department needed to develop high-quality materials. Good marketing material is expensive to develop and produce. Does your vendor provide enough high-quality fliers and catalogs to help you promote its products? Does the vendor exhibit at trade shows to help you establish brand recognition with your customers? Will it provide samples? Finally, does your vendor sell direct or to house accounts? A trustworthy vendor does not sell around you and make excuses when you find that it has.
Web Site Capability — Your vendor should have a quality Web site that is easy to navigate. Can your link to its page bring increased traffic to your own Web site? If the vendor’s site is rich in accessible information, your customers can visit it to learn more about the products they then buy from you. You and your customers will also benefit from seeing product pictures, dimensioned drawings, installation and user guidelines, and product safety information with MSDS on your vendor’s Web site.
Look for the vendor site to provide you with password-secured business-to-business features for placing orders, order tracking and order history. If you use those features, your ordering and tracking time and expenses will diminish.
Full Product Lines — Using more vendors than you actually need to use introduces unnecessary expense to your organization. Every order you place involves the expense of placing, receiving and paying for the order. Several small orders placed with several vendors also means you pay more total freight charges.
Finally, using several vendors means each vendor sees your orders as small dollars and may consider your account to deserve little support. Consolidating those same orders with one vendor makes your business very important to that vendor. For the good of your business, consolidate your orders and place them with fewer full-line vendors.
Fast and Complete Order Fill — Some otherwise desirable vendors cannot fill the orders you give them. How long are you and your customers willing or able to wait for the product? Your customer may not wait long before calling your competitor. You need a reasonable inventory to provide good service to your customers. However, you deplete your cash when you carry excess inventory to compensate for vendor delays.
Training Commitment — The training you require ranges from product sales training (features and benefits) to service department training (service manuals). Review training materials before selecting someone as your vendor. Depending on the product complexity, your customers may also require product-use training. What product-use training does your vendor offer? Is it leading-edge, interactive training or just some poorly written directions?
Warranty Support — Review your vendor’s warranty policies and confirm its warranty support practices. What the vendor says and what it does may not be the same. The vendor should help you deal with customer complaints. Does it deny the problem, leaving you stuck with an upset customer and no resolution? In the absence of real warranty support, your vendor may lose an order, but you may permanently lose a customer. For the distributor, the stakes of an unresolved warranty complaint are much higher.
Profit Partnerships — If you want your distribution-based business to grow and profit, you do not just need a vendor. The world is full of vendors. You need a manufacturing vendor that thinks and acts like your profit partner.
What is the difference between a vendor and a material handling profit partner? A vendor makes a product and sells it to you. A vendor thinks it has done its job when you as distributor pay the invoice. A profit partner understands that its job is done only after the distributor is successful in reselling the product at a profit. A true profit partner vendor knows its success depends upon your success.
|Meet the Author
Bill Ramsey is vice president of battery protectors at Quick Cable, located in Franksville, Wisconsin, and on the Web at www.quickcable.com.