Volume 47, Issue 4 - May 2008
In the news
by Dan Warren president of Warren Window & Supply Inc. in Rapid City, S.D.
Partnering with Distributors Offers Solutions and Benefits
In the October 2007 issue of Shelter magazine’s sister publication, DWM magazine, I read an article entitled, “Focus on Distribution Channels.” The article examined the reasons manufacturers eliminate distributors. As a two-step door and window distributor, the article caught my attention. (Please note: the same article ran in the October issue of Shelter, along with the article, “Taking the Hit,” which discussed the impact that manufacturers selling direct has on distributors.)
Three of the four manufacturers listed in the DWM article, other than Pella and JELD-WEN, who support distribution, are small regional manufacturers. One company sells its products in New Jersey and metro New York City, another lists its markets as New Jersey, New York and Pennsylvania and one lists the state of Ohio. Only one manufacturer had locations nationwide. The theme of the article seemed to be eliminating distribution due to two factors: price and competition.
The article would lead you to believe there is no room for distribution in the supply chain. Considering the fact that the majority of the large door and window manufacturers go to market through distribution, there certainly must be a role for the distributor. Like anything else, there is good and bad, but good distribution certainly works. This begged the question why the article talked about distribution channels. Maybe the article in DWM should have been entitled, “How Small Regional Manufacturers Sell Their Products.” On the other hand, maybe a better question would be, “Can Distribution Help the Small Manufacturer Grow their Business?”
Let us examine the role of distribution; distribution covers a territory or geographic region, and the distributor is responsible to take care of this area. This responsibility can be accomplished either through one-step (dealer) or through two-step (distributor) distribution. Depending on population or part of the country, the geographic area could be sizable. A dealer covers the local cities or smaller geographic areas. The distributor often covers large geographic areas through single or multiple locations. A distributor purchases in truckload quantities, breaks the loads down and warehouses or delivers the product to the dealers throughout their territory.
Distribution, whether one- or two-step, can offer market advantages to a manufacturer—large or small. An established distributor has built strong relationships with its customers over the years. In most cases, an established distributor has gained the trust and respect of its customers. Trust and respect does not come quickly. It takes months, if not years, to establish these factors. As a distributor, it is our responsibility to make sure our customers are profitable and successful.
A distributor typically has the following responsibilities:
In addition, distributors might assist in servicing the products sold, give technical support on manufacturers’ software programs, assist in quoting projects for dealers and/or customers and act as a placement service for employees, dealers and customers.
Creating annual business plans in conjunction with the manufacturer is the responsibility of a distributor. A strong partnership between distributor and manufacturer can be a driving force in the marketplace, and a strong, well-managed, successful distributor can offer the manufacturer financial security. Instead of a large number of accounts receivable, the manufacturer has one.
As stated earlier, there can be good and bad distributors, but the majority of distributors take their responsibility very serious and have a niche in their market areas.
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