 |
||
 |
Current Issue | Past Issues | Contact Us | Advertising | www.pei.org | |
 |
|
|
|
Distributors
And Their Manufacturers
|
Unlike some distributors, Larry Kowalski, president, Epic Equipment Sales & Service Co. (Roselle, IL), looks forward to receiving email from his manufacturers. “They email product information to me, and I love it. If there's a defect in a product or something goes wrong and there is a recall, I know it immediately. If a price went into effect on the 15th of the month and I don't have the details, I can get the information sent immediately. We're in an electronic world, and email makes some things easier and faster.”
The cost cutting of a few years ago had an impact on manufacturer staffing levels, particularly with sales and customer service. Leak Petroleum Equipment (DeWitt, MI) once had techs on a job site waiting four hours for a return call. Says President Mark Leak, “Getting timely answers to questions, especially when there is a problem, is very important to us.”
“Price changes occur every year, and we appreciate knowing what they are far enough in advance so we're not caught having to change a quote in the middle of doing one,” says Dave Embertson, president, Erling Sales & Service (Houston, TX). Embertson also points to product changes. “It helps to know what the changes will be and where the supply will be going.”
“It'd be nice to pick up the phone or send an email and get a response within 10-15 minutes,” says Stephen Scott, president, B & J Equipment (Longview, TX), “because typically the customer has just called with a question or is standing across the counter waiting for an answer.” Scott indicates the downside of sending an email message, resending it the next day, then having to wait a few days for a reply: “If I can't get an answer to a customer in a timely manner, he'll start looking elsewhere for someone who can.”
Timely bulletins are very important to Stephen Preston, president of Oil Equipment Sales & Service (Russell, KY). “If there is a software problem, we need to know about it right away. We don't want our techs wasting time trying to fix something and they can't, because they don't yet know there is a problem.”
|
#2 Inventory
Best-In-Class Manufacturers stock plenty of
product, move parts quickly, and ship next day with minimal hassle.
“The key for us is inventory turns, just as it is for the manufacturers,” says Erling Sales & Service's Dave Embertson. “We're no more interested in having dead inventory in our plants than they are.” Embertson is not fond of parts “collecting dust” on his shelves. “Being able to turn parts quickly helps us reduce the amount of working capital tied up on those shelves.”
On the other hand, David E. Stein, president, Innovative Petroleum Equipment & Contracting (Lebanon, PA), points to an industry that now operates 24/7/365 as one of the reasons equipment and supplies have problems. He explains, “There is pressure on manufacturers to make sure we get those parts and pieces at a faster pace.” Stein calls this putting the cart ahead of the horse, “because the technology is ahead of some of our abilities and things are not being tested well enough before being put out in the field. As a result, there are conflicts with interfacing, and it all comes back to the installers and servicers.”
#3 Warranty
Best-In-Class Manufacturers honor their warranties.
They are accountable for their products when a problem occurs. They
make sure the fine print is clearly understood.
|
Andy Thompson Jr., president, Central Industries (Savannah, GA), expects products to be tested properly before being mass produced, and if a problem occurs a year or two out, the manufacturer makes good. “Step in and take accountability,” he advises. Accountability and loyalty are very important to Central Industries. “Some distributors will buy the best price. We count loyalty to our lines as very important.” For some items, like brass goods and fill caps, Thompson narrowed down his suppliers to one or two lines per product. “We can better support a limited number of manufacturers.”
Customers are spread far and wide in the large, rural areas of South Dakota, requiring that inventory be stocked on service vehicles. “If it isn't, we have to make two trips, and when we start driving 100 to 150 miles for a service call, the cost becomes very distasteful to the customer,” notes Merrill (Frenchy) Peltier, president, Sioux Equipment Company (Sioux Falls, SD). So Peltier keeps his trucks well-stocked. As a result, products sit on shelves longer than they would in a less rural-based company. “When a warranty begins on the date a product was purchased and that product ends up sitting in stock, problems occur. I'm not saying manufacturers should warranty product for four years sitting on the shelf,” says Peltier, but Best-In-Class Manufacturers take unique situations with product into consideration.
Like all distributors, Ed Tropper, president, JEMKO (Erie, PA), knows that warranty sometimes becomes a struggle, “because we didn't dot an i or cross a t,” and he respects the manufacturer who “works with us to get a problem resolved.” One supplier will replace defective product at no charge and even reimburse for time. “There's never a big fight over the warranty.” Tropper cites another example of when a customer could not take receipt of a tank they ordered. Even though it was already built, the manufacturer did not bill JEMKO and was able to re-use it at another location. “They have a better opportunity than we do to resell product, and we appreciate their help.”
#4 Factory Support
Best-In-Class Manufacturers have local reps
who can walk on a sales call with a distributor, who carry a card
with the factory name on it, who know the factory's policies, and
who intervene when needed.
Bart Scowley, CEO and president of Shields, Harper & Co. (Oakland, CA), describes the ultimate factory sales representative: “He has a higher level of product knowledge than any of my people, and he's been given a level of authority to make decisions.” This authority allows the rep to give answers to the distributor “today, so we don't have to work our way through two or three levels of management until we have to go to the president of the company who decides whether the rep can spend 50 dollars on our behalf.” According to Scowley, Best-In-Class Manufacturers have representatives with the authority and the budget to make decisions and exceptions, so management can do other things that are more productive for their companies and their distributor-customers.
|
The economy of recent years has resulted in the elimination of many factory sales representatives who personally knew their customers, had a deep and thorough knowledge of their products, and were passionate about the success of both the manufacturer and the distributor. Replaced by “manufacturer representatives,” according to most distributors, it is the rare manufacturer rep who can provide the same level of service that the factory representative can. While they do exist, by virtue of their profession, they are sometimes unable to provide extensive product knowledge, factory support, solutions, or even time to distributors. It is a situation that many distributors are currently trying to figure out how best to work with.
#5 Ease Of Doing Business
Best-In-Class Manufacturers have processes
in place for easy ordering. They respond promptly to voice and email.
They provide product information any way the distributor wants it.
And real people answer the manufacturer's phone.
What Marios Achilleos, managing director of Acme Trading Limited (Nicosia, Cyprus), really wants are “product brochures and other promotional materials provided free of charge.” And a “thank you” when he sends an order wouldn't hurt either. Achilleos notes, “It would help if manufacturers understood the peculiarities of my local market.”
Susan Maples, director of operations at RBM Company (Knoxville, TN), likes a single, clear discount structure to go along with a manufacturer's freight policy. She looks to the customer service department for Best-In-Class service. “No matter who answers the phone, we'll get an answer because everyone is trained equally and well and can deal with any situation.” Maples also examines stocking levels. “Some manufacturers go above and beyond when there is an emergency order. If I need it quickly, and they don't have it, they'll find another distributor with the item in stock.” Now that's customer service.
|
Relationship Blues The 15 most-often mentioned challenges distributors have with their manufacturers:
|
Ken Hagman, president, E.O. Habhegger Company (Yeadon, PA), misses catalogues. “The product information is all online.” The good side of this, according to Hagman, is that the information is up-to-date. The bad side is that he has to search through what seems like hundreds of pages to find what he is looking for. A Best-In-Class Manufacturer will email or fax him just the pages he needs. Hagman acknowledges that some of his younger employees don't mind searching through Web pages for product information. “It takes them 10 to 15 minutes, but that's 10 to 15 minutes they could be using to get an order.”
|
Rob Vyncke, manager, Illowa Enterprises (Moline, IL), looks for flexibility from manufacturers. “In the field, there are so many different circumstances and situations and one size does not fit all.” Vyncke prefers an easy and fast ordering process. “I used to just pick up the phone and place an order. Now I go online and download order sheets, which takes more time.”
“I can do an order within minutes,” says Richard Todd, president, LeBlanc & Theriot Equipment Co. (Metairie, LA), whose Best-In-Class Manufacturer “spent the amount of money required to put an online ordering system in place that is easy, fast and accurate. And they keep fine-tuning it.” A recent multiple-line order took Todd three minutes to complete and print out. “You can't beat that.” Todd adds that he'd like to see all manufacturers using a common bar code system on their product lines to make inventory warehousing more efficient.
Written statements, including sales and distribution policies, are what Shields, Harper & Co.'s Bart Scowley looks for from Best-In-Class Manufacturers. “Pretty much everything that defines the way we are going to have a business relationship.” Scowley describes this as an extension to the manufacturer's terms and conditions. “Put it together and say, 'this is the way we are going to operate.'” Scowley believes this type of document would eliminate a lot of contract conflicts.
#6 Quality Product
Best-In-Class Manufacturers ask the right questions
before building quality product. They ship fast, and every so often,
they go into the field with their distributors and get their hands
dirty in order to learn how to improve their product.
|
“Come to our marketplace and visit with us,” says John C. Miller, president, Orange Coast Petroleum Equipment (Orange, CA), who says Best-In-Class Manufacturers are active in the development of new products. “They want to know what is missing in the market.” Miller points out that most manufacturer reps are so busy focusing on their next sale of the many lines they represent that they are unable to provide that close attention to any one of their lines.
Con Hobson, vice president from Dale's Service (Boise, ID), appreciates manufacturers who “understand the way we work within the market, and then work within our paradigm.” When a manufacturer offered to put in an equipment system on a one-year, no-cost trial basis for one of his customers, Hobson was very pleased. “There was a method to this madness. It is a large customer, and a good prospect.” If all goes well, this partnership between distributor and manufacturer will result in increased business for both, and a delighted customer. Win-win-win.
#7 Training
Best-In-Class Manufacturers provide useful
training that is easily accessible to distributors, including centrally
and regionally located live programs and online desktop classes.
They give plenty of advance notice when visiting.
There are a lot of costs involved in training, including travel, hotel, and being off the books for a few days. Steve Maze, treasurer, M & W Equipment Co. (Huntsville, AL), applauds online training, certification and recertification programs. “Keeps me from having to buy an airplane ticket and a motel room, and the employee is not out of work for a week.”
“With salespeople scattered across a state the size of California, it's just about impossible to bring them all in when a manufacturer calls and says, 'We'll be in your area next week and we'd like you to get all your salespeople together.' Then multiply that times all your suppliers!” Gary Carson, president of Commercial Petroleum Equipment (Sun Valley, CA), points to Web-based training as the answer to this dilemma.
|
#8 Loyalty
Best-In-Class Manufacturers know that loyalty
is a two-way street, and they prove that loyalty by their actions.
They provide sales leads and fair pricing. If there is a problem,
they help solve it. Before selling direct or adding competitive
outlets, they talk about it with those most impacted.
“Loyalty builds loyalty,” says Rodrigo Benedetti, buyer, Benedetti Zelaya (San Salvador, El Salvador), citing the example of a manufacturer who respected his company's sales territory, supported only by a verbal agreement, despite pressure from another distributor within his territory. “This boosted our trust toward this manufacturer,” says Benedetti. He adds that trust builds loyalty, as does clear, straightforward communication, along with competitive pricing. “We never would have thought of buying from another supplier if our long-term manufacturer had not sold to another distributor in our territory, without even notifying us. We realized that it was not useful to be loyal to that manufacturer and ended the relationship.”
“I'm always suspicious when a manufacturer doesn't call me with a sales lead,” says John Keefner, president, PFT/Alexander Service (Signal Hill, CA). “I know they are not playing the game straight.” In return for that loyalty shown by manufacturers, Keefner knows their reward is “increased sales.”
Manufacturers selling direct to end-users is a fact of life for many distributors. This doesn't mean they like it. “Once something like that starts, it's like a freight train. It can't be stopped,” says Con Hobson of Dale's Service, who has found a positive to the situation. “We had to look within ourselves to see what we could do to add value to the products that a manufacturer selling direct via an Internet store cannot provide. You can't get service from an online store. But we can sell all that needed service.”
|
Stand Up and Be the Big Boy
Like all relationships, in order to make the one between a distributor
and a manufacturer work, both sides have some hard work to do. Eric
Scott, president of The Southern Co. (Memphis, TN), has some
advice for his fellow distributors: “Understand what you can
control and change in the relationship, and do the best job you
can for that relationship. We can spend a tremendous amount of time
and energy fighting with the manufacturer, but all that does is
create ill will for both parties. Somebody has to stand up and be
the big boy and say to the manufacturer, 'If that's what you want
to do, fine; what I want to do is run my business to the best of
my ability and return revenue and equity to the bottom line. That's
my job.' We are in position to lead and guide our companies, not
worry about the things we can't control, such as a manufacturer
setting up a competitor in a key market, or a manufacturer selling
direct, or a manufacturer selling to someone at a bigger discount.
Yelling about these things is not going to yield any return to our
bottom lines. So if you understand the dynamics of the relationship,
you learn to adapt.”
And you move forward...sometimes together, sometimes apart...always forward.
