Hitting The Mark

What does it take to make a relationship perfect? There are many correct answers to that question, and the distributors and manufacturers below each share the one that is most important to them. Implement these 12 practices to improve all your manufacturer-distributor partnerships and move toward perfection.

Listening
by Bill Hawthorne
“The most basic of all human needs is the need to understand and be understood. And the best way to understand people is to listen to them.”
-Ralph Nichols

The words above best sum up what I think describes a successful customer, distributor and manufacturer relationship. The basic principle of listening and learning is something that must be continuously focused on. Because the manufacturer and distributor focus on such a variety of industries and business models, the ability to listen first must become second nature.

To meet the customer’s need for effective, quality-based and cutting edge materials that satisfy the customer’s needs, we must start with the act of listening and build upon that foundation. We need to listen in order to better understand the end-user’s operation, his needs and his ultimate goals. We need to also listen in order to understand how the products we manufacture are utilized after they leave our factory.

Distributors are the critical key to a manufacturer’s in-field knowledge and success. As distributors listen to their customers and learn what their needs are, they must translate what they hear to the manufacturer (who also is required to have well-honed listening skills).

Critical to this successful communication of information is the ability of both the manufacturer and the distributor to listen well. When communicating, the distributor cannot hesitate in his delivery of information regarding his customers’ specific needs. The distributor needs to communicate his customer’s expectations and his understanding of the solution that will meet his customer’s needs. The manufacturer is required to not only listen, but then evaluate what he has heard and react to that information.

How do distributors know that their manufacturers are listening to them? The evidence is in the development of the products that end-users are asking for. If your manufacturer does not deliver the product that your end-user customer is asking for, it’s a good sign that someone is not listening.

There are times when a manufacturer will hear something that he doesn’t want to hear. As an example: If the distributor is asking for a lower-cost product (translation: asking the manufacturer to utilize lower cost of materials), the manufacturer should dig deeper and understand why the request for lower cost materials is being made. Nine times out of ten, the motivation for that request is the simple desire to be more competitive.

“If your manufacturer does not deliver the product that your end-user customer is asking for, it’s a good sign that someone is not listening.”

As partners, a manufacturer must understand what the distributor is seeking. The manufacturer must help that distributor to communicate information which illustrates the manufacturers’ capabilities. By listening, the distributor allows the manufacturer to communicate the information required, enabling that distributor to be more competitive. The distributor can then provide that information to his customers. In order for that manufacturer to provide the support his distributor requires, the manufacturer must listen to that distributor’s needs and then deliver a response to those needs.

It’s not just selling product anymore. Today’s customer is so much smarter that a distributor really has to be on his toes when walking into an end-user’s facility. Customers are asking for more intelligence. They require solutions. “Here’s my problem, tell me the best way to solve it. Have you done this before? And if so, where? With whom? What was the outcome?” Distributors must be able to provide those answers.

The word “distributor” is somewhat misleading when we describe today’s channel. A distributor no longer markets commodities. Today, a distributor is an integrator. A distributor is a provider of solutions. In order to provide the solutions that customers require, the distributor must make it easy for the customer to ask the all-important questions. And once those questions are asked, the distributor must be armed with the answers. Today’s distributor must be able to provide the solution and answers that their customers require or be aligned with someone who can. Today’s market demands this.

Do you have your ears on?

Bill Hawthorne is vice president of sales at Hytrol Conveyor Company, located in Jonesboro, Arkansas, and on the Web at www.hytrol.com.

Trust Your Partner
by Mike Thorne
Today’s business climate has created the opportunity for manufacturers and distributors to find a new path to success. This is especially true when manufacturers choose distribution as their primary channel to market. There are many articles and professional businesses that concentrate on communication, targeted account selling, sales training, problem solving, value-added service and more. While all of these are important in a quality relationship, the one aspect that is essential to make all or any of these strategies work is trust.

“Both manufacturers and distributors are after the same thing, and working together will enable each to accomplish more.”

Webster’s defines trust as “assured resting of the mind on integrity, veracity, justice, friendship or other sound principles of another person; confidence; reliance.” In my experience in the material handling industry, open conversation on this subject with distributors done in a respectful manner with conviction and self-assurance sets the stage for real gains in growing the respective businesses for both parties.

If each party is willing to look at the relationship from the other’s point of view, I am confident they will conclude that both manufacturers and distributors are after the same thing and that working together will enable each to accomplish more. This last statement is easily said, but results will only happen when trust truly exists between the two parties.

How can trust be developed? Earning trust from the other party is not as difficult as you may think. In fact, many attributes of trust already exist between manufacturers and their distribution channel, such as confidence, expectation, reliance and support. Each has a dependence on the other.

Development of trust actually needs to happen very quickly in today’s business environment in order for success. Luckily, this can be done. It is as simple as doing what you say you are going to do each and every time. Do not over-promise, but do deliver on what you promise. Strive to achieve this goal consistently, and trust will be earned for the long haul.

Mike Thorne is vice president of sales and marketing at Albion Inc., located in Albion, Michigan, and on the Web at www.albioninc.com.

Out-Of-The-Box-Thinking
by Dan Rosskamm
In times like these, it is easy to point fingers. Let’s face it-business is pretty bleak. It is tempting for distributors to look at the situation and blame manufacturers for their lack of innovation, insular focus or heavy-handed techniques. It is equally tempting for manufacturers to criticize distributors as lazy, misguided or simply having given up. In truth, it doesn’t matter if we blame Alan Greenspan, investment bankers or Joe the Plumber, because the reality is that we are all in this mess together and we need to partner with each other to succeed.

“We are all in this mess together, and we need to partner with each other to succeed.”

Obviously, the hallmark of any successful partnership is communication. It takes a lot of courage and trust to lay things on the line, and it is critical that both sides fully understand and appreciate each other’s strengths, opportunities, resources and constraints. Communicating, however, should be the easy part; doing something constructive with the information is hard.

The key ingredient to successful supplier-distributor relationships in this environment is creativity and out-of-the-box thinking. Innovation, after all, need not be solely limited to products. By creatively looking at new ways to leverage competitive advantages, suppliers and distributors often can help themselves the most by learning new ways to help each other.

In my prior life at Target Corporation, we called such communication “strategic partnership meetings.” We spent a considerable amount of time discussing where we saw the supplier relationship “now,” meaning the next 90 days; “next,” typically one year out; and “future,” meaning down the pike. Based on this platform, we would then “whiteboard” next generation product ideas, mutually beneficial investment opportunities, how we can streamline processes, and how we can share our resources more efficiently. It was amazing to me how many of these ideas that started out seeming outlandish or implausible ended up driving tremendous business results and significantly strengthening supplier/retailer relationships along the way.

In the current business environment, all indications are that the easy solutions have already been tried, making the need for well-informed creativity all the more important. Whether it’s leveraging WebX for cost-effective training sessions, wikiMHEDA for information sharing, or implementing a joint Web-based enterprise resource planning (ERP) tool, there are a number of good ideas out there waiting for suppliers and distributors to put their heads together and brainstorm outside-the-box solutions to achieve shared success.

Dan Rosskamm is president of Big-Lift LLC, located in Lombard, Illinois, and on the Web at www.bigjoeforklifts.com.

Sense of Urgency
by Jerry Weidmann
Success goes to the agile competitor. Both manufacturer and distributor must respond at today’s speed of business.We all know about the impact of today’s technology (e-mail, text messaging, cell phones, etc.) on communications with our customers and our partners. Customers are accustomed to near instant follow-up and responses to their needs, and today’s technology has only intensified the expectations of our customers.Our key suppliers in the lift truck industry participate in our business on many levels, including sales support, strategic pricing, technical support, product deliveries, product problem resolution, warranties and warranty policy decision-making. As partners, we meet the expectations of our customers for performance characteristics, reliability and convenience. The speed of our response when resolving problems can greatly enhance or diminish our reputation.The four critical areas below are ones in which we and our partners must respond with urgency:New Product Introductions: As our industry continues to rapidly evolve, product features and benefits evolve. If our supplier does not consistently offer competitive products, along with features and benefits which are competitive, our market share will decline. To illustrate my point: Pity the poor distributor whose manufacturer is offering DC drive/DC hydraulics in a market that is dominated by AC drive and hydraulics.Product Issues in the Field: Both the distributor’s and manufacturer’s reputations hinge on product reliability. Difficulties that appear in the field must be addressed quickly in order to arrive at a satisfactory resolution, which can only enhance customer loyalty. It is important to understand that each day a customer remains dissatisfied amplifies operator dissatisfaction and the customer’s production difficulties. At a minimum, it will cause reputation problems for both the distributor and the manufacturer, and at worst it will cause loss of business for both.

“If our supplier does not consistently offer competitive products, along with features and benefits which are competitive, our market share will automatically decline.”

Technical Issues: The customer does not care whether issues are specific to one individual product or if the issue is one which concerns the entire line. If there is a problem, it impacts the factory’s and the distributor’s reputation.

Warranty or Policy Issues: When a product has a failure or failures during the warranty period, the remedy is provided at no monetary cost to the customer. Regardless of the remedy, each failure impacts the partner’s reputation. The impact can be minimized if the remedy is offered immediately. If the failure(s) require weeks of discussion or rental replacements, the impact will be greater.

An explosives expert once explained to me that his risk of personal injury was minimized by “minimizing time of exposure and maximizing distance” from explosive materials. I believe this philosophy applies to product support.

Minimize time of exposure. The shorter the time a customer experiences the consequences of a problem, the less impact on their operations and the less memorable the events are in evaluating the product. Problem resolution must be measured in hours and days instead of weeks and months.

Maximize distance. If the problem is repetitive, the product should be removed from the customer and resolved at the dealership.

The responsibility for operating at the speed of business rests on the partnership of the distributor and the supplier. A superior supplier recognizes its responsibility to the customer through the distributor and the urgency of problem resolution. Our reputation and reputation of the manufacturers we represent is based on the image of quality and reliability that we build with our customers. We are expected to deliver quality products and services, on time, at the right price. But we are measured by how effectively we resolve the problems that occur.

Perfection is the goal. Operating with a sense of urgency to resolve problems at the speed of business is what keeps us close to the goal.

Jerry Weidmann is president of Wisconsin Lift Truck Corp., located in Brookfield, Wisconsin, and on the Web at www.wisconsinlift.com.

Connect Early
by Jay Easley
Why would you involve a supplier early on in a project? It depends on what you expect from your supplier. If you are simply looking for them to supply commodities at the lowest price, then be prepared to receive exactly that. However, if you value the expertise and experience a supplier can bring to the project, then the earlier you involve the supplier, the more benefit you and your customer will receive.How many of us have been invited to a project in which the customer already has made decisions based upon flawed assumptions? Unless you truly believe that you know more than your suppliers, then you may make the same mistake by not involving the right supplier as soon as practical. Certainly you cannot bring all your suppliers to every call, but as soon as you believe you have determined what the solution is, then the project is best served by involving the right supplier.

“By partnering early on, the supplier becomes a stakeholder and therefore more accountable for the end results.”

Who is the “right supplier”? Generally, the more technical or specialized a product or service, the more important expertise and experience become. Are your suppliers experienced expert specialists in what they provide? If not, then be prepared for them to gain experience at your expense-sometimes with irreversible impacts to your customer and results which highlight their and your shortcomings. If, however, you have done your homework and developed relationships with suppliers who have a track record of delivering on your projects, then you have the opportunity to change the relationship from one of a supplier/buyer to a truly collaborative partnership. Once you have done this, then the advantages of utilizing their expertise and experience early on become apparent.

Without fail, the earlier a supplier is involved in a project, the better the end results. By partnering early on, the supplier becomes a stakeholder and therefore more accountable for the end results. By providing the supplier the opportunity to suggest changes to equipment, scheduling and perhaps even design, we are now more responsible for the success of the project and, additionally, for minimizing scope change and the associated project impacts, including costs to both the distributor and the end-user. Conversely, if someone doesn’t have input into a project, it is much more difficult to hold them accountable for the results.

Although a supplier should not divulge trade secrets, we certainly can utilize the knowledge we have gained from other industries to benefit a project. These may be industries or practices the distributor may not be aware of due to their marketplace niche and customer base, including unique product applications, controls design, equipment lead time considerations and even methods to optimize the operation.

The earlier the right supplier is involved, the more opportunity they have to make suggestions, resulting in a greater benefit to you, your project and, ultimately, your customer.

Ranking Suppliers
by B. Kevin Katona
Some time ago, I asked my salespeople which manufacturers’ products they liked selling best. After answering who, I then asked them why. The responses were surprising. Their primary responses were not the manufacturers who provided the greatest margins or those who commanded the greatest brand recognition. Quality was rarely mentioned. They overwhelmingly chose the manufacturers who provided some form of great support. I found my salespeople exceptionally loyal to those manufacturers who quickly provide answers to their questions, who provide a quote on short notice, who work to help resolve problems rapidly when they arise, and who join them on a sales call when necessary. As a company, we tend to think the same way. We will always support the manufacturer who supports us.Like many in our business, we literally have hundreds of suppliers’ names in our database. When someone needs that oddball widget, we attempt to find it. New salespeople can be overwhelmed by the sheer size of our database. They commonly ask, “Where do I begin to focus with all this?” or “What matters?” A few years ago, we made it easy for our salespeople to know where to place their focus.

“A Tier One supplier will not demand that we achieve specific quotas while providing the same product to a competitor (especially if we are stocking his product).”

We developed a three-tiered system in which salespeople receive the greatest commissions on Tier One suppliers and the least on Tier Three suppliers. Based on what is important to us as a company, ten companies are listed as Tier One suppliers. Our salespeople know which companies they should focus their efforts on.

We put our money where our mouth is when it comes to paying commissions. Commissions on products made by ten Tier One manufacturers pay three times the rate of commissions on products manufactured by Tier Three companies. Commissions on products manufactured by 17 Tier Two suppliers pay twice the rate of Tier Three suppliers. Tier Three suppliers are everyone else in our database. We started with a smaller commission spread between the tiers and saw it had an effect. When we moved to the current rate, it achieved the sales focus we desired.

Our criteria for Tier One suppliers are simple:
   Tier One suppliers do not sell direct.
   Tier One suppliers protect our territory.

Our system completely discourages selling a competitive brand just because we are offered a better price point. The supplier benefits by commanding the attention of our salespeople and gaining larger sales volume (which can make a good relationship better).

Our original process was a simple one. We made a list of suppliers who were important to us. And then it was just a matter of making sure that our territory managers were provided with the direction that would underscore the importance of focusing on particular products. We continue that same process as we review each supplier annually.

We know that the relationships we enjoy with Tier One suppliers are contingent upon us hitting good numbers. In the past, our salespeople were all over the board selling whatever product came along. They lacked focus. We did not have the strong relationships with the supplier and were spread so thin that we really were not providing anyone with strong numbers. We would rather focus on a particular product and be the best at marketing that product than compete with 12 other dealers with the same product, each of us beating ourselves up over price. We have been able to increase our margins using this approach.

The partnership between distributor and manufacturer must be a mutually beneficial one. Exclusivity in the marketplace has faded away in many cases. But if we focus on a particular manufacturer’s products, we expect our territory to be protected and to receive the support we need to succeed. I realize that we do not live in a perfect world, but our system unifies our selling efforts and boosts sales volume for our Tier One suppliers. It strengthens our key supplier relationships, which has many positive benefits for both DACO and our suppliers. Our system has been in place for a number of years, and we consider it a home run.

B. Kevin Katona is president of DACO Corporation, located in Kent, Washington, and on the Web at www.dacocorp.com.

After-Sale Support
by Michelle Kissinger
Manufacturers know their sales and distribution channel is an essential part of their business strategy. Through their channel, they can establish sales territories beyond their natural geographic boundaries. An effective channel also allows manufacturers to react quickly to changing market conditions. In many cases, channel management is the key differentiator between a market leader and competitors offering comparable products.Distributors also derive benefit from the partnership. They can rely on producers to carry the burden of product development and production. They have access to a wide array of products from which to choose to meet the needs of their customers. Distributors can also count on their manufacturing partner to provide sales collateral, analytical tools, training and access to technical experts to help them sell and meet their financial goals.

“Without manufacturer-supported service capabilities, channel partners can only get part of the job done.”

Distributors carry their fair share of the load, too. They are challenged with learning the intricacies of a wide array of products. They also bear the brunt of customer issues and have to be ready to respond quickly and competently to customer questions and problems. They have to keep an eye on their manufacturing partner for changes in pricing, warranty terms, products and business processes. At the same time, they have to manage the core sales activities of prospecting, assessing customer needs, crafting the offer and closing the sale, all while keeping their “soft skills” sharp to stay effective in the sales arena.

World-class manufacturers are sensitive to these challenges. And they understand that their success is tied to the combined success of their distribution partners. Smart manufacturers provide a number of resources to support their distributors. Sales aids and technical expertise are the minimum resources that a manufacturer should provide and are fairly common.

Less common is a comprehensive manufacturer service program that distributors can leverage to provide complete “cradle to grave” solutions to their customers. Suppliers need to provide continuous distributor service training and provide access to manufacturer service support resources. Easy access to parts and accessory ordering systems is also critical. They also need to offer preventative maintenance programs that distributors can use to help customers protect their equipment investment. Distributors need equipment optimization analysis programs to help customers squeeze maximum value out of capital investments. Without these manufacturer-supported service capabilities, channel partners can only get part of the job done.

The importance of an efficient, knowledgeable and responsive distribution channel cannot be overstated for manufacturers and distributors. Part of a solid business strategy for both camps is the development of long-term and mutually beneficial channel partner relationships. Distributors should carefully evaluate their manufacturer partner options and align themselves with one that has the broadest set of resources they can draw on to be successful and build loyal customer relationships.

Michelle Kissinger is marketing manager for EnerSys, located in Reading, Pennsylvania, and on the Web at www.enersys.com.

Mutual Commitment
by Steve Guagliano
The dictionary defines mutual commitment as “the process of committing oneself, dedication to application, an undertaking.”In light of new complexities and sophisticated processes on the parts of both the producer and the dealer, the communication and exchange channels have become vital in today’s business world, to the point where manufacturer-dealer relationships have become symbiotic in nature, in that the two are interdependent and mutually beneficial to each other.Manufacturers have clear responsibilities. The manufacturer’s key aim is to invest in the required research, to design and engineer products in need, and then to develop the products with efficiencies that will enable marketable pricing. Additionally, full aftermarket support during the life of said products is essential to the sales process and long-term credibility and success.Dealers too have clear responsibilities. The dealer’s aim is to implement as diligently as possible the complete elements of the sales process, including the following:

Prospecting the marketplace for end-user clients
Developing and presenting the corporate message that involves full and complete product knowledge and
training of products and services being presented (provided by the partnering manufacturer)
Dealing with customer objections that could impede finalizing the sale
Closing the deal.

“Harmonization includes forwarding to partner manufacturers the data collected from the proactive interaction between the dealer and the customer.”

Historically, manufacturing companies and dealerships have clearly defined these responsibilities. However, the philosophy of “mutual commitment” has not always been so defined. Manufacturers and dealers today who recognize the essential role of what can be referred to as “interorganizational relationships” will be able to corporately harmonize with one another more successfully.

Harmonization includes forwarding to partner manufacturers the data collected from the proactive interaction between the dealer and the customer. This collaboration ensures that products are designed and produced to meet specifications and pricing that all customers need, which ultimately leads to mutual sales success. Positive harmonization also includes the development of new and innovative strategic alliances that focus specifically on both parties recognizing and capitalizing on unique strategies that incorporate the elements of both the manufacturing processes as well as sales and marketing strategies.

All company personnel are working exceptionally hard these days, especially in light of current economic conditions, to go beyond merely staying in business, but rather to excel in business and in what they do. Collectively, these newly formed alliances are allowing personnel to design extraordinary non-traditional supply programs that allow both partners to expand their markets, re-invent and diversify their mutual corporate story boards, and provide exceptional growth and profit opportunities that can only be realized by mutual commitment.

Manufacturers and dealers are committing their efforts to one another, applying their wares in a dedicated fashion and undertaking business functions like never before. This is mutual commitment. What a wonderful thing!

Steve Guagliano is president of Mobile Industries Inc., located in Mississauga, Ontario, Canada, and on the Web at www.mobilept.com.

Talk About It
by Scott Hennie
The relationships a distributor has with manufacturers vary in their degree of commitment-everything from a true partnership (with only a handful) to those many suppliers whose products the distributor sells every now and then. No matter what the established relationship is, the ultimate goal is always to get to that “true partnership” level. That is always the intention, but breakdowns do occur-most of the time as a result of communication issues.

“If you know that price is going to be the driving factor behind getting or losing a sale, have that conversation upfront with the manufacturer.”

In every distributor-manufacturer relationship, communication is essential. That communication must be direct and honest. Communication consists of what needs to be said, not what we think the other party wants to hear. Say what you mean and mean what you say, and do not withhold information. A lot of times, what you don’t say is just as important as what you do say.

When meeting with vendors and manufacturer partners, speak very candidly. Put all the cards on the table to make sure everyone is on the same page and agrees to the way business will be done together. Set the rules right away so there are no surprises. One of our rules is: “If we’re going to fight, let’s fight now.” In other words, let’s not wait until we’re so far down the road to address complicated issues that they’ll really affect the relationship negatively.

If you know that price is going to be the driving factor behind getting or losing a sale, have that conversation up front with the manufacturer. Addressing it early on can help to create a win-win-win for the distributor, the manufacturer and the customer. Sometimes, though, the manufacturer just can’t do it. Again, it’s best to know this right at the start so that you can mutually agree to pursue another vendor-without going behind your partner’s back. Plus, getting everything in the open prevents wasting time and money. On the other side of the coin, if part of the manufacturer’s market strategy is both working through distributors and direct to end-users, that’s fine; but have that discussion up front and lay the ground rules early on.

Speaking of selling direct, customers sometimes feel more comfortable dealing with the manufacturer directly, which brings up situations that can test the strength of the distributor-manufacturer relationship. A true partner will only sell through the distributor if that’s the rule you’ve set, and they can make the distributor aware of any problem the customer may be having with you. If you have a strong relationship, the manufacturer will not hide that kind of information from you.

Ideally, these types of conversations should take place in person. There’s no replacing face-to-face communication. But in the big picture, other forms of communication are suitable too. New product releases, for instance, can be easily understood through e-mail. I think you have to use every conduit of communication that you have, but you have to use those conduits when appropriate and for the right content.

Distributors must return the favor. It’s always helpful, for example, to tell your manufacturer partner what is in your sales pipeline. With today’s technology, it wouldn’t be that hard for a distributor to design, quote and win a project without a manufacturer even knowing about it, and then dropping it in their lap with no time to prepare. But that’s not a fair way to operate. Again, open communication to alert them that you may be using their product in a project is a big help to them.

Open communication can give the manufacturer a little bit of insight into what’s happening in the marketplace, information they can use for forecasting purposes. Some distributors get skittish when confronted with questions from manufacturers about who their customer is or where they’re located, fearing the manufacturer will go around them. But, again, your willingness to answer such questions should be a testament to the strength of the partnership.

Scott Hennie is vice president of systems at Hy-Tek Material Handling, located in Columbus, Ohio, and on the Web at www.hy-tek.net.

Salesperson To
Salesperson

by Louis Coleman
What should a manufacturer salesperson do for a distributor? Ask any number of people in our industry and you’ll probably get as many different answers. Many distributor salespeople would likely say that the most important thing for a manufacturer salesperson is to provide the distributor with sales leads. While that is certainly a good thing to do, it ranks further down on my list of the keys to a great, strong distributor-manufacturer salesperson relationship.First and foremost on my list is trust. Unfortunately, though, this is something that often gets lost. A distributor salesperson should be comfortable taking the manufacturer sales rep into the customer site with no reservations. Ideally, you’d like it to get to the point where the distributor salesperson can be comfortable that, even if he or she is not present, the manufacturer salesperson can talk to an end-user and still keep the distributor in the loop and look out for his and his customer’s best interest.

“The distributor must trust that the manufacturer will support their activity, make them look good and help them get the job.”

As in any type of relationship, building that level of trust is the hard part. Doing the right thing consistently will build it up, but it can be lost instantly if both parties are not upfront with each other. Things don’t always go the way you’d like them to go, but by talking and communicating, you can build a trusting relationship-even if you don’t like the answers you get.

Another contributing factor is for the manufacturer to make the distributor certain that the manufacturer will not go around them and sell direct to the end-users. The distributor must trust that the manufacturer will support their activity, make them look good and help them get the job. The manufacturer is an extension of them, and vice versa.

Of course, a manufacturer can tell that to distributors all he wants, but the only way to ensure that they really believe it is to never do it. Know up front what the rules of engagement are when it comes to customers. Build rules around the dealer to protect him or her. Those rules can vary from dealer to dealer, but they must be adhered to consistently.

After trust, the second item on my list is support-and that support comes in a variety of areas. One area is training to help the dealer salesperson understand the product, its applications and places it could potentially be sold. Another area is more formal training through on-site visits with dealers and customers. I believe it is still important for a manufacturer salesperson to be in the territory, visiting distributors and visiting end-users with the distributor’s salespeople. Too often in this day and age, companies are moving to the new style of selling via the Internet. But lots of customers still need hand-holding and support. That really goes in lockstep with the trust issue, because not all things go right. When the wheels come off the bus, how do you deal with it?

When I hire a salesperson, there are only a few things I look for. Give me somebody I can trust; if I can trust them, then the customer can trust them. Give me somebody who does what he or she says he or she’s going to do and gets out there and hustles every day. At the end of the day, those are really the important traits-someone who wants to work hard and do right by his customer. Every person has a different style and a different personality, but the constants are that the person wants to do a quality job, enjoys working with people and has a technical aptitude.

The manufacturer’s outside salesperson must be an advocate for both the distributor and the end-user. The manufacturer salesperson plays a very balanced role between what’s good for the manufacturer and what’s good for the customer.

Louis Coleman is sales and marketing manager at Autoquip Corporation, located in Guthrie, Oklahoma, and on the Web at www.autoquip.com.

Doing Dialog
by Tom Peczerski
With deteriorated economic conditions, manufacturers and distributors are looking for ways to improve profitability. Studies show that high-quality communication between manufacturers and distributors improves working relationships; however, despite advances in technology, most of the problems that occur in sales distribution channels are the result of the absence of that kind of information.When the economy was strong, people didn’t pay much attention to working relationship problems. They were focused primarily on increasing sales volume and market share. Both are appropriate objectives for any business. However, findings show that much of this top-line growth didn’t make it to the bottom line.

“The most common
and costly problems that ccur in the manufacturer/
distributor working relationship are fixing mistakes, expediting orders, holding excess inventory and waiting.”

Caught in the flurry of technological advances and current management fads, manufacturers and distributors have lost sight of the fact that open and honest dialogue, rather than a continuous monologue of complaints, forms the basis of a productive and profitable working relationship. The solution is for manufacturers and distributors to engage in a dialogue with the purpose of learning that most of the problems they have are a direct result of poor communication.

Communication is the sharing of information between manufacturers and their distributors. Information provides the working relationship with a sense of purpose and direction. It also provides a mechanism for the efficient allocation and coordination of resources. In the absence of information, the purpose and direction of the working relationship becomes blurred, decisions turn into guesswork, and valuable resources are consumed by activities that waste a large amount of economic wealth, a.k.a. money.

The most common and costly problems that occur in the manufacturer-distributor working relationship are fixing mistakes, expediting orders, holding excess inventory and waiting. The occurrence of these problems can be linked directly to the absence of two primary types of information: product related and relationship management.

Product-related communication assures that the right products, in the right quantity, get to the right place, at the right time, in a cost-effective manner. In the absence of product-related information, it’s easy to see how the combined resources of manufacturers and distributors are being wasted on non-revenue-generating activities as people look for, expedite, and then wait for inventory to get it to where it is needed to meet demand. Not to mention the impact on customer satisfaction as they are forced to wait for the product they need to arrive. In addition, customers often incur the additional costs for expedited deliveries.

Perhaps more important, yet often overlooked, is communication related to managing the manufacturer-distributor relationship. This type of communication provides purpose and direction for the relationship and access to high-quality industry/market information. With-out this type of information, manufacturers and distributors fall victim to history-based planning, assuming that the future can be predicted based on what has happened in the past. As a result, they are slow to identify and respond to opportunities in the marketplace, such as new products, competitive threats, etc.

What is telling is that studies show there is no communication related to the goals and plans for the working relationship. With the absence of communication and resulting failure to receive information, conflict in the relationship increases due to uncertainty, created by a lack of direction and feedback. Performance and profitably suffer as valuable resources are ineffectively utilized due to a lack of planning and coordination.

What is the solution? The solution is for manufacturers and distributors to engage in dialogue with the purpose of learning that most of the problems they have are a direct result of poor communication. This can be achieved on a one-to-one basis, at trade meetings and/or through distributor advisory councils.

In today’s tough economic environment, taking action to improve the working relationship through effective communication can be the difference between profitability and just getting by.

Tom Peczerski is CEO of Power Designers USA, located in Madison, Wisconsin, and on the Web at www.powerdesignersusa.com.

National Accounts
by John Faulkner
The handling of national accounts is a key piece of the puzzle that is a distributor-manufacturer relationship. National accounts can make up a large portion of the potential parts and service business in a distributor’s territory, and it is imperative that the manufacturer send those accounts to the distributor.Large companies such as Home Depot, Coca-Cola or PepsiCo deserve to be national accounts because they have so many locations. Geographic constraints prohibit me as a distributor from getting business there. However, a manufacturer does have that power. Manufacturers can write that business for sales, and they, in turn, rely on the local distributor to take care of warranty, parts and service issues at that particular account’s locations within the territory.

“National account service work often results in sales of other warehouse products like storage rack, shelving or conveyor.”

Notice I said, “within the territory.” Distributors are bound by our sales and service contracts to stay within a certain area of primary responsibility (APR). Even if a national account that we service in our territory has a location in an adjoining territory, we would never go into the adjoining territory to service that customer-even if the customer asked us to. Such situations are laid out in the contract, and such a request would need to be handled by the manufacturer.

Because of our respect for that contract, we don’t sell or solicit outside our territory. In return for that, we expect that the manufacturer will do likewise and send us all national account business within our territory. Once the sale is made by the manufacturer, they have an obligation to send me that business.

If we don’t perform, then it’s within the customer’s right to throw us out. But, again, that would be an issue for the manufacturer to handle.

On the other hand, when we do perform well, national account service work often results in sales of other warehouse products like storage rack, shelving, conveyor and the like. That’s what makes a manufacturer’s commitment to providing access to national account business extremely important to all distributors. John Faulkner is president of FMH Material Handling Solutions, located in Denver, Colorado, and on the Web at www.fmhsolutions.com.

 

  

 Material Handling Equipment Distributors Associtation

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