Recently, an industrial manufacturing client of mine was kind enough to let me sit in on its Distributor Advisory Council (DAC) meetings and then go on a few distributor meetings. They did a very nice job of facilitating the discussions and all of the distributors were very cordial… but while I was quietly observing I was sensing a tone of concern from the distributors: They weren’t comfortable that they understood the manufacturer’s direction. I continually heard questions like:
- “What’s happening to brand X?”
- “Are you going to develop a product line that does Y?”
- “When will product line Z be discontinued?”
- “What are you plans to react to competitor A’s recent announcement?”
The manufacturer’s responses tended to be “good question… let me get back to you.” That didn’t seem to satisfy many distributors.
At a break, I took one of the more vocal distributors aside to ask him what concerned him the most. To my surprise, he said that he wasn’t too concerned that the manufacturer wouldn’t make good decisions; they’re a quality supplier. What concerned him was that he didn’t know the direction, so he couldn’t plan appropriately. He told me “How can I plan when I don’t know what’s coming from one of my key suppliers? If I think there’s even a remote possibility that they’re going to discontinue a product line in the near future, I’m not going to invest in utilizing that line for my customers. I’ll find a comparable line from another one of my suppliers that has made it clear they’re not going to yank it.”
This summed it up pretty well. Distributors are like financial markets… they don’t like uncertainly. A manufacturer / distribution relationship is a partnership like any other: an agreement to go on a journey together. Distributors are much more likely to sign-up for the journey if they understand the destination.
Bart Schwartz, President / ICR / 630.503.6093