Posted by: brandextenders | August 27, 2012

Are Suppliers from Mars and Distributors from Venus?

Author and relationship counselor John Gray wrote a best-selling book about the problems men and women encounter in relationships. The premise is that it’s almost like men and women are from different planets with different customs because of the fundamental differences between them. I see the same concept play out every day in the dynamic supplier-distributor relationships that are the foundation of our industry. Without suppliers, what would distributors sell to their customers and without distributors, suppliers would have no avenue to distribute the products they develop and manufacture. And yet, there are challenges.

I’ve been on the distributor side of this business for 25 years and have seen the gamut of suppliers ranging from amazing to work with to my not understanding how they stay in business and the same holds true for distributors. While the supplier-distributor business model has changed over the last few decades due to the Internet and easy access to foreign manufacturing, it’s still the way most companies do business within our industry.

So what does it take to build a good relationship between these two groups of businesses? Can Venus and Mars come together in a business relationship that is mutually beneficial? Here are five things I believe need to happen for that bond to occur:

  1. Partnership: These days when someone says they want to “partner” what they often mean is they want all of the benefits without giving up anything. Distributors have come to think of EQP (end-quantity-pricing) as a Constitutional guarantee rather than something you earn. I want a supplier partner that is willing to give me deals, payment terms, possibly EQP, but in return I promise to consolidate sales to them for their range of products. If I ask for something from a supplier partner, I expect to give something up in return.Being a partner is a two-way street and if it’s not, then it’s not a partnership at all.
  2. Trust: Both sides in a partnership must trust the other to do the right thing, to be ethical and honest in all their dealings. If a company you are working with says they will do something or handle something, you must trust they will follow through and keep their word. A partnership is collaboration and trust ensures that collaboration will endure and be mutually beneficial. Trust can’t be taken for granted and must be nurtured. Trust may very well be the most important aspect of any partnership because without it, there is no foundation to build upon.
  3. Communicate: There is a time for emails and a time to talk things out and good partners know the right time for each. Too many times people hide behind emails when picking up the phone can solve a problem or ease concerns much quicker. When you have an issue or a question, pick up the phone and work it out or, if possible, meet face-to-face and then send a follow-up email with the details of your meeting. A lack of communication can lead to assumptions that harm the relationship when in fact those assumptions could be totally wrong. Knowing where you stand and sharing feedback regularly is a key to strong, long-term relationships.
  4. Deliver on Time/Pay on Time: Developing and keeping business relationships depends on both parties holding up their end of the bargain. Suppliers need to deliver their goods and services on time and distributors need to pay the invoices on time. Discuss production times ahead of the need as well as payment terms. Goodwill and trust are essential to long-term business relationships and if there are extenuating circumstances, then communicate with each other ahead of time so there are no surprises (see #3).
  5. Look to the Future: Our world changes fast and while a supplier or distributor might be a good fit for each other today, tomorrow could be a different story. Ask about the future plans of your partner; are they developing new products, sourcing new factories that could reduce costs or production time, growing their business organically or through acquisition. Always be open to new opportunities, but remember the grass is always greener on the other side, at least in theory. Relationships must change and morph over time to stay vibrant, to stay competitive and make financial sense to all partners.

Our supplier-distributor business model is similar to many other industries however it is very unique in one way. Before the advent of the Internet, the unwritten rule was suppliers in our industry only sold through approved distributors and distributors only bought from approved suppliers. More and more though, suppliers are setting up discrete and sometimes not-so-discrete business units that sell directly to end-users and distributors are importing directly from manufacturers outside our industry. Does this portend the end of a once vaunted business model that many now think seems quaint?

An article here on the Material Handling Equipment Distributors Association website discusses where the relationship between suppliers and distributors will be in five years. The word value is used throughout the article to describe the vested interest both parties have in the mutual success of the other. Is it still possible for Venus and Mars to align and create a true partnership where business strategy, values, long-term goals and vision are the same? I believe it is however it takes more work than it used to and it takes a commitment from both companies to trust, to communicate and to be willing to change as needed to keep the partnership strong.

Tell us what you think. Can Venus and Mars align or is a collision inevitable that will forever change this business model and our industry as well?

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Responses

  1. Nice article, and one that hits close to our commonsku heart of connecting our industry’s supply chain. Venus and Mars can certainly work together, but we all need to keep in mind the needs of the end user when making day-to-day business decisions. Framing the conversation that way makes it less about supplier vs distributor and more about the people keeping us all in business.

    • Thanks for the feedback Jen and you are absolutely correct. Without the end-users, none of this would matter.

  2. […] in the pre-sale phase, suppliers can act as an extension of the distributor sales force. I loved Steve Woodburn’s take on this very communication divide between distributors and suppliers as it highlights many of […]

  3. Great article. Without a level of trust, honesty and integrity from BOTH sides, the industry is doomed to fail. Once the “partnership” becomes too one-dimensional, it is not a good deal for either party. As a distributor, I expect my top suppliers to help me with virtual specs, better terms and special pricing. In return, I owe it to the supplier to sell the heck out of their line–even if another supplier is running a special on a similar item for a few pennies less. It is a two-way street.

  4. […] loved Steve Woodburn’s take on this very communication divide between distributors and suppliers as it highlights many of […]


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