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Choosing a Right-Sized Distribution Partner in the New Economy

Choosing the right-sized distribution partner can increase a manufacturer’s competitiveness. “Small” doesn’t have to mean limited capabilities or higher expense.

In the new economy, customer is king again. In Distributors Secure Role With Extra Services, EBN outlined how the distribution channel strives to add value for both customers and suppliers.

Manufactures shopping for a right-sized distribution partner want value. This includes customer experience, competitive pricing, and, ultimately, revenue generation. Personalized service, a nimble infrastructure, and a sense of ownership will ensure a manufacturer receives the best value proposition. When devising a distribution strategy, suppliers should compare total cost of ownership models by taking into consideration component costs, available support services, and time to market.

Small or specialized distributors are organized to work closely with suppliers; understand their product roadmaps; and provide personal attention. The right-sized partner should be flexible enough to respond to industry trends and changing design needs. Fewer processes and people stand in the way to rapid market introduction. Larger manufacturers can benefit from utilizing the niche distributors as well: specialty channel partners focus on only a few lines so suppliers receive more attention.

A good channel partner will have excellent personal contacts within the suppliers’ sales and applications teams. This can translate into a big advantage for any manufacturer. Suppliers should be able to consider their distributors as an extension of their technical staff, engineering, QA, or purchasing. A good distributor is an excellent conduit for ideas of entirely new products or adding features to an existing product.

For customers, niche players provide value by means of pre- and post-sales support. This should include detailed product selection, extensive technical support, and worldwide project registration.

Successful small distributors operate innovatively, listen to customer needs, and provide value through personalized services. They offer applications support and direct factory access and local inventory and flexibility in meeting logistics goals. (Remember the value of being remembered by name without navigating a huge phone tree?) In summary, the approach is customer first — the value of each and every customer is always greater for small businesses.

“Small businesses are the essential engine of the American economy, generating two-thirds of U.S. jobs and roughly half of our GDP,” according to government reports. For a small or midsized manufacturer, finding the right-sized partner is a competitive advantage.

7 comments on “Choosing a Right-Sized Distribution Partner in the New Economy

  1. Barbara Jorgensen
    November 9, 2012

    Peter: great point about “small” not being equated with “discounted” or “service-challenged.” Small distrbutors have always had a great reputation for hands-on customer service. Sometimes, price and cost gets in the way (let's face it, the big guys have leverage), but small distributros always provide value.

  2. _hm
    November 11, 2012

    Yes, I agree with this. This approach is very effective. It saves time and keeps cost under control. Most importantly, tirght sized partner works as part of small orgnization and perform many of crucial of task like research for parts etc.

     

  3. mfbertozzi
    November 12, 2012

    Very interesting article and based on Barbara's post, I would like to point out (and share) additional perspective to consider in making partnerships' decision. We have assisted to unpredictable strike-out due to financial crisis, all over in the word. That said, ideal partner or rightsized-partner is choice for the short term, because in the long term, is still huge the probability for a financial crash, including major distributors. So the question is ” how can I reach a proper trade-off in making decision if we need to cross right-size, financial stability and long term as main vairables of the problem? “.

  4. Barbara Jorgensen
    November 12, 2012

    @mfb: I think you have to run a cost comparison. That may be difficult becuase every scenario is different. But I've found recently that my time is worth something and if someone can execute w/o going through multiple layers of management, and the costs aren't outrageously difference, the convenience alone may be worth it.

  5. PeterC1
    November 12, 2012

    Thank you for pointing out another advantage of a specialized distributor – able to actively participate in the part selection.  We think of ourselves as an extension of the customer. 

    We would often find you a unique solution that  you wont find anywhere else, therefore you can make your product different, more competitive.

    Customers have a choice. We appreciate your business. 

     

     

  6. _hm
    November 12, 2012

    @Peter: Yes, this is quite true. Reasons are – these distributors have plethora of experience as designer, quality expert, manager etc. at most reupted organizations. They almost share these knowledge base free when you associate with them as customer. I adore them most.

     

  7. mfbertozzi
    November 13, 2012

    @Barbara: yes, very wise approach; speaking for myself, current difficulties are about the model to adopt; in fact, maybe, sooner or later, I will be in condition to classify distributors based on right-sized criteria, but in front of unpredictable financial events, maybe also Mr. Bernanke is facing some small issues 😉

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