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Give It And Take ItSuccessful parties find the points of value and exploit them.By Charlie Glab
A relationship between a manufacturer and a distributor is a two-way street, and when practiced this way from the start, it works well. The relationship really is a "give-and-take" thing. Giving leads to positive results as long as neither side gives away the farm. Taking, on the other hand, should be used sparingly, as it creates short-term pleasure but often leads to long-term pain. Yes, giving may cause short-term pain, but it often leads to long-term satisfaction. Win-win situations happen when both parties give to the cause. Distributors often can achieve more value per hour spent with their suppliers as compared to time spent with their customers. As a manufacturer, we see gains distributors make when they spend time getting to know what we can do. Sometimes, distributors work closely with us in the development of new products. As a result, they achieve more market success than anyone across our network because they have helped create the piece and know the market fit better than anyone, including us at times. Consistency is a main ingredient for achieving a well-established business, and it is always found in an “ideal business partner” profile. Consistency must play a vital role in the manufacturer's policies, decisions and strategies, as well as in our relationships with distributors. Distributors can get frustrated without short-term, “special-for-you” deals, but they respect this position. Consistency helps maintain the overall wellness of the relationship and the industry. Manufacturer/distributor success relies on a value factor in product-to-market. Successful parties find the points of value and exploit them. This strategy adapts to any framework. For instance, a new product cycle begins when the distributor gets an idea through contacts in the field, then convinces the manufacturer to invest in that idea. The manufacturer develops the product, then takes it back to the distributor to sell. There is shared value every step of the way. The value is in the source for the idea, the resources and investment in R&D, the production know-how, and the contacts and resources for the market. It's important to understand that the distribution transaction is not the only value-added feature of the product cycle. Thinking this way only leads to mediocre market performance. Both parties need to work together to find and exploit the value of what each can do best, resulting in much better performance. Price is something, but cost is key. The lowest-priced supplier
can end up being the one with the highest cost. A higher-price supplier
may consistently create the lowest cost. Cost includes more than
the actual invoice amount. Distributors do not have a lot of room
for hor-sing around. It doesn't take too many bad shipments to eat
up their profit. Manufacturers should strive to create the least
amount of cost for their distributors. Improvement is unlimited,
but it takes working together. Price may be the supplier's business,
but cost is the business of both parties. Be prepared to dance the old “give-and-take” and your dancing partner, male or female, may become your best buddy. Experience will tell you to put a hold on the backyard deck thing and resolve any problems on a business level. Be ready to give in some, spend the time necessary, keep consistent, work toward the value, and look at the cost, not price. If this is done, there is a good chance it will get done right. The biggest satisfaction will be that you, manufacturer and distributor, can go on being best buddies. |
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