Buyers want more from distributors
By Kevin R. Fitzgerald -- Purchasing, 5/6/1999 6:00:00 AM
In the story that begins on page 50, Senior Editor Susan Avery takes a serious look at the current state of the relationship between purchasing professionals and industrial distributors. Most buyers give distributors high scores for overall performance, but some add a serious qualifier: Far too often, distributors do not exert the extra effort needed to truly nurture customer relationships.
Several years ago many large purchasing organizations realized they were spending far too much money to acquire, store, and use goods purchased from distributors, especially MRO supplies. Purchasers began asking distributors to take on value-added tasks, especially inventory management. Purchasers also wanted distributors to lower unit prices in return for guaranteed higher volumes under longer, often corporatewide contracts.
At that point, it appeared that buyers and distributors had agreed, at least in part, on the future direction that distribution should take. But several years later, buyers say distributors must improve their performance in some key areas:
* Knowledge of cost-related issues. Purchasers want distributors to have a firmer handle on total costs, and to continuously work to remove cost from both ends of their operations. This lack of understanding of total cost by distributors has been around for some time, but hasn't seemed to improve much, according to buyers. Many buyers are put off by any attempt by distributors to automatically pass through price hikes from producers. They want distributors to negotiate on their behalf and offer alternative products when producers raise prices.
* Technical knowledge and training. It's clear that distributors have improved their technical expertise, but not enough to suit their customers. Purchasing pros want distributors to be much more proactive in technical training but, unfortunately, many distributors offer no customer training at all.
* Inventory management. Perhaps most disappointing is that buyers report that many distributors don't focus on taking inventory out of the supply chain by speeding up cycle time. In fact, some buyers report that some distributors are trying to lower their own inventory levels with increased risk for customers, a sorry statement since the main mission of most distributors, at least in many buyers' eyes, is storing inventory and delivering it when needed.
As you can read in our distribution report, purchasers who have been most successful have identified the best performing distributors and given them as much of their business as possible. Expect this trend to continue, and expect further consolidation in the distributor supply base as a result.
Now Playing:
Dinosaurs? I don't think so
05/04/2000Are distributors going the extra mile?
05/06/1999
