Monday, February 23, 2015

Distributor – Supplier Etiquette

Lately I have been thinking about Distributor-Supplier Etiquette; or should I say the lack there of.

As our industry accelerates through technology and demographic changes, we find ourselves with many new players on both sides of the distributor/supplier relationship. Training for supplier/manufacturer employees is directed toward products, customer types and factory programs instead of building a better channel.  In addition, the demographics in our industry are forcing generational interaction; so we find baby-boomers and millennials seated at the same table trying to communicate.

The chasm between partners widens; often based on simple lack of professional courtesies.  Miscommunications and friction between distributors and their upstream partners are building.  And, for some strange reason, nobody seems to be talking about it.

I want to bring this front and center.  To prime the pump, allow me to share a bit of the bad.

A Good Example of a Bad Example
Just a few weeks ago, I was invited to sit in on a distributor/manufacturer planning meeting.  The distributor had a long relationship with the manufacturer, and even though the distributor was producing strong sales results overall, a couple of key product lines were lagging.  Earlier in the year, the distributor and their supply partner had laid out an improvement plan.  For all intents and purposes, the plan had been a success; measurable results pointed to a significant turnaround.  I anticipated a positive working meeting to continue the efforts.

As we gathered in the conference, I couldn’t help but notice an air of nervous energy amongst the manufacturer’s people. The supplier’s local team members positioned themselves together on one side of the conference table, the distributor team members on the other (which is a topic unto itself.)  After a few social niceties, the supplier’s regional manager turned to the other group and bluntly stated, “We are here to understand what you are going to do for us in 2015.” After the distributor outlined 10 or so programs in place and plans to add more resources in the coming year, the regional manager said, “Good, put them on paper, and I will let you know if that’s enough.”

I couldn’t help myself, this was an expensive meeting with more than nine people in the room.   I held back as long as I could but had to ask, “Isn’t this about joint planning? Shouldn’t we discuss how we can make things work as a team?”  It was at that point the regional manager dropped the neutron bomb of distributor/supplier dysfunctional relationships.

“We are the ones who make the decision as to whether you are doing the right things.  Don’t forget who’s in charge here.  We are the manufacturer, you are the distributor.  We’ll tell you if you’ve got it right.”

While the words may not be dead-on accurate, they are mighty close.  The implication, tone and style conveyed the same meaning.  I could have suggested a hundred (maybe a thousand) alternatives.  The point is the comment was certainly not productive.  And, definitely not demonstrative of good etiquette.

I am interested in gathering your thoughts on distributor/supplier etiquette.   And, I am not being one sided. We are a team.   Distributors sometimes lack etiquette as well.  Respond with your favorite social faux pas.  We will reward the best one with a $25 Amazon Gift Card.


jhausch said...

I always look at meetings that take that sort of a turn and first wonder what is driving that sort of behavior from the mfr. Is it pressure from above? Issues outside of the parties present? Even personal issues can affect how people move through their day. Yelling at your partner and pissing in their cheerios to prove your dominance rarely moves the conversation forward...

However, I then tell myself that I'd rather be facing a demanding situation than dealing with the repercussions of NOT seeing the vendor was upset. When they are upset and not talking to you, you should be worried...

I've seen time and time again, when the numbers are not what either party expects, there is the inevitable cross-blame going on. Vendor to mfr, "the rep is really hard to work with..." Rep to mfr, "the distributor is just not pulling their weight..."

I don't really have a story to share, but I will add one thought. It seems like the some mfrs are directing their reps and direct force to do more customer contact rather than taking advantage of the force multiplication offered by a strong distributor.

Our mfr reps and area sales managers who account plan with us, make calls on US for product review and training, and generally remain front of mind, inevitably see increasing sales.

Great article, Frank. Thanks for sharing.

ndtech said...

I like you Frank have been on both sides of the a Distributor and representative of a Manufacturer. My pet peeve is when Distributors pull the "I'm your customer" card on the Manufacturer. Not much of a partnership.
Another great, thought-provoking article!

Anonymous said...

The problem is that MOST distributors today are going through the same LEAN supply chain consolidation as most industry. Other than their fast moving mfg, they are extremely and increasingly risk averse to carrying inventory. This creates a ton of pressure on the supply chain. In my opinion, most distributors create little value, even though they talk about it quite a bit. They add margin, drop ship a good lot, and do less and less of what they are supposed to do which is to have products in stock.

Virat Dhingra said...

Nice Blog we are also a distributor of Die Steel.

Virat Dhingra said...

Your blog is very informative, the relation between stockist and manufacturing company is good because both are the complement one of these.