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LCG And Its Partners

Liquid Controls Group, A Unit of the IDEX Corporation, has had a Distributor Advisory Council for many years. Two years ago, the company re-invigorated the council. In this exclusive interview with The PEI Journal, President Kevin Hostetler talks about the importance of LCG's distributor channel, and how the company works with its distributor-partners.

The PEI Journal: Why does Liquid Controls Group have a Distributor Advisory Council?
Kevin Hostetler: We felt the need to view our business as a singular process in which LCG and distribution can both achieve competitive success and profitable growth. This can only be accomplished with a strong relationship and direct and open communication between our LCG and our partners.

How is the council structured?
KH: Rather than have a broad cross-section of partners with sometimes competing agendas on our distributor council, our approach is somewhat different. We approach this from a market segmentation point of view. We have forums targeted at specific market segments which we hope to grow. For our business, these segments may include terminals, transportation OEMS, aviation, etc.

This structure allows a more targeted approach to identify improvements in business practices and the identification of targeted growth opportunities. With this method, some distribution partners may appear on more than one council.

Our regional sales managers, customer service team and sales & marketing leaders can nominate potential members. We collectively decide who will finally receive the invitations.

When does the council meet?
KH: Our target is a formal meeting annually, supplemented by interim phone conversations pertaining to specific actionable items brought up in the forum.

What happens during the meetings?
KH: Meetings are scheduled for between two and three days. The forum includes the following topics:

Distributor Relationship Building
Collaboration with Top Management
Sharing of Key Concepts and Ideas for Joint Growth
Review of New Product Development
Strategic Development of Programs that Support Distribution and IDEX / LCG
Communication of LCG Vision and Strategy

We begin with a review of the legal compliance standards for the meeting. These include: confidentiality, the avoidance of the creation of discriminatory practices which would adversely impact any class of distribution not present, the avoidance establishing our distributors' resale policies, and pricing issues between distributors, among other topics.

We then review the current state of the market. In this case, our partners bring forward completed templates which identify:
	Market Shifts Channel Competitive environment	Economic Environment Trends in Distribution New Technology

We then shift our focus to the identification of growth opportunities given the information provided from the presentation noted above.

Additionally, we shut down our operations and ask each partner to present to an open forum (all employees) a 15-20 minute presentation on where we are effective and where we can improve our business. We ask for specific examples of where we have failed our partners in the past, i.e., late delivery, quality issue, etc. Our goal is to get each employee—from the office to the factory floor—to feel an increased level of connection to our partners and an understanding of what issues they face as they represent us to the ultimate end-users. This leads to a process improvement session where we review how these issues are resolved by others in the marketplace and whom we can learn from.

We should always remember that in order to improve our relationships, we need to find time for social interaction as well. In each case, we try to plan an event which includes our customer service teams, sales & marketing teams, engineering, operations, etc. The forum may be comprised of a handful of partners and a handful of LCG representatives. The social events may include as many as 40 members of the team.

What are some of the most important things you've learned from your council?
KH: We have learned a great deal regarding changes in the marketplace and how we need to tweak our business models to stay current and get our leading edge.

We learn how we can resolve internal issues that create havoc for our partners. One example would be how we process internal debit memos. Resolution of these internal issues helps ensure that our partners are truly focused on their highest payoff activities- selling and representing LCG positively in the marketplace.

What is the biggest advantage of having a distributor advisory council? What is the advantage to your distributors?
KH: Our partners represent the frontlines. They will see changes and trends in the marketplace ahead of us. Our ability to understand these changes, to create a strategy to addressing them and then to execute these strategies will provide growth for LCG.

Our partners understand they are not alone in their battle to grow and increase profits.
When needed, they can reach out beyond their existing relationship with the regional sales representative and quickly elicit the support of senior management in pursuit of their efforts.

What advice would you give distributors who participate in advisory councils or are considering participating?
KH: Be prepared. If you come expecting to have a one-way distributor complaint session, don't bother. While we do allow time to understand problems and focus on possible areas for improvement, you must really look at these forums as a chance to help shape and create growth and profit opportunities for both organizations.