Ship and Debit Special Pricing Programs

By -

-->It’s happening more and more. Distributors and their Supply partners are negotiating special pricing agreements. In some segments of the Electrical Distributing business over 80% of the product sold goes out the door at a price which is below “normal distributor price”.
The process usually works like this: The distributor buys a product for full price - Puts it in his warehouse – then sells the product below full price. After the sale, the distributor submits a report to the manufacturer and is issued a rebate/credit.

We grew into this pattern little by little. We started off with a few agreements and a couple of catalog numbers. In today’s market, cash is becoming an even scarcer commodity and this practice often involves tens of millions of dollar. A study conducted by The National Association of Electrical Distributors sited that many distributors do without this cash for over 30 days. Often this comes about because the distributor has a poor process. To add insult to injury, I can think of at least a dozen incidents where the distributor’s poor process ended up with lost reports and lost cash. SAP has computer software to sell, but let me implore you to design a real process – with written checks, balances and quality control.
Read the full article here.

Click here  for a brief tutorial on special pricing agreements and ship and debit programs.

Comments

Anonymous said…
I do not evеn know how I ended up here, but I thought thÑ–s post wĐ°Ñ• goοd.
Ó€ dο not κnow who you aĐ³e but
certaÑ–nly you are going to a famous blogger Ñ–f you aren't already ;) Cheers!
Also visit my site - buying adipex online
October 1, 2012 at 1:17 PM
Post a Comment

Popular posts from this blog

50 Questions for Distributors

By -
Image
Last week I wrote an article titled “Six Questions that Demand an Answer.”  Sharing the article with a few trusted advisers, I received one consistent bit of feedback best summarized by this response. “Frank, I agree these are questions we must ask ourselves; they caused me to pause and ponder.  I used them as an exercise with my team to think about our overall strategy.  I believe taking the time to think about our business from an outside perspective to be justified and worthwhile.   Sometimes it’s hard to do this subjectively.  I would like to see more questions just like these.” The following is my first round of questions.  I have put them into categories to make them easier to digest.  Some will apply to your position, some will not.  I suggest spending a moment visiting these topics with members of your own team. A note:  The readers of this blog come from a variety of backgrounds, hold a diverse collection of positions within distribution and come from a number of
Read more

Ship and Debit Programs

By -
Image
Special Pricing Agreement and Thoughts about Ship and Debit Programs Click here for a brief tutorial on Ship and Debit Programs. Special Pricing Agreements (SPA) have been around for a very long time. The concept is simple; a manufacturer uses their distribution channel as a vehicle to service a customer who requires very low pricing to match some commercial situation. The details of the commercial situation aren’t really all that pertinent. They can arise due to customer potential, competitive pricing pressure, or supply contracts driven with large mega-corporations. The point is normal distributor margins no longer support the selling price and the distributor plays a critical role in providing some service to the customer. In years gone by, distributors involved in these situations purchased products earmarked for the special priced customer at sub-distributor price levels. The freshly purchased (at lower than normal cost) products were either brought “into stock” to sell
Read more

Where are the Sales Calls?

By -
Image
Sales managers are under pressure to increase sales calls and productivity. This leads to scrutiny of call reports, which often reveal poor results.  To improve their reports, salespeople are counting drop-by visits with no customer contact as sales calls, which is ineffective. Several factors contribute to the lack of customer visits: poor time planning, inefficient travel, failure to make appointments, getting caught up in trivial tasks, excessive focus on customer emergencies, and complex individual situations.  To address these issues, you need a coaching plan. Over a 6-8 week period, sales managers should review each seller's planned activities for the upcoming week, log data on their plans, and compare them with the actual results. This allows for the identification of: • Scheduling issues.  Are they really planning ahead? • Issues with setting appointments.  Do they need some coaching here? • Emergencies that took them out of the field.  Are they justified or just con
Read more