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Last week, I had the opportunity to meet with a number of distributors and their end-buyer clients to discuss at length their compliance philosophy and growing focus on compliance programs. These corporate customers made it crystal clear that compliance programs are not only a critical component but also a differentiating variable when selecting distributors to create their promotional programs. Additionally, these buyers shared their intent to consolidate the number of distributors with whom they do business down to those that can demonstrate the knowledge of and the ability to deliver safe and compliant products.
Clearly, this consolidation is not going to happen overnight. But the movement is picking up steam across a large number of Fortune 1000 companies. Much of this is driven by what seems to be a weekly national news focus on companies who are perceived to be dropping the ball on product safety or compliance issues. For example, just two weeks ago the Detroit Free Press reported "Another Shipment of Toxic Toys Turns Up in Detroit." And back in January, The New York Times published "In China, Human Costs Are Built Into An iPad." And these are just a few of the many headlines that have captured much media attention.
Another interesting thing happened at last week's meetings: the conversations underlined the reliance that both Fortune 1000 customers and their distributors have on their supplier partners to actually deliver compliance. As manufacturers or importers of record, industry suppliers bear the majority of the responsibility for introducing safe and compliant products into commerce. However, distributors functioning as the industry's sales team also have a growing role in connecting the supply of safe and compliant product with the demand coming from corporate America.
Regardless of the issue, the best solutions to complex problems have always been found through a collaborative effort. And this is true in our industry; it truly takes a village to successfully deliver product safety and compliance.
Compliance programs have become a differentiator that is prompting new levels of partnership between end-buyers and our industry distributors and suppliers. It was interesting to hear from both distributors and their customers last week that while cost continues to be critically important, the cost conversations are more often taking place with those companies who can first deliver compliance. In other words, if you can't deliver safe and compliant product, you are not even in the conversation—and most likely don't even realize the opportunities you are missing.
The market has clearly moved. More suppliers are seeing the opportunities compliance brings. And while there are challenges and costs associated with compliance programs, these suppliers are now running toward compliance as part of their overall business strategy. You can see what I mean in the previous blog post "A Race To The Top Via Safe And Compliant Products."
Corporate America is paying attention to compliance, and these companies are doing a much more thorough job of vetting their distributors. Those who can deliver safety and compliance make the cut. Those who can't are finding themselves getting left behind or left out, and it is brutally difficult to win back business that was lost due to the absence of a compliance program.
Because distributors offer thousands of products, there's little, if any, chance of them having the knowledge or expertise on the requirements for each category. Recognizing this, they have turned to the supplier experts they can identify and are leaning on them to educate both their organizations and their Fortune 1000 clients on all aspects of product safety and compliance. It's very difficult to be good at everything, and these distributors see the immense value of having suppliers who can function as their experts in this area. These deeper and more frequent interactions are opening up new opportunities for all involved parties.
Distributors recognize the spike in inbound compliance expectations, and they are placing increased importance and value on the supplier partners they select. They realize that a supplier's ability to deliver safety and compliance often indicates a higher level of performance across the board.
These distributors are going on offense—and they're voting with their purchase orders. These companies realize that the only thing a preventative defense does is prevent you from winning. Many industry companies reactively rely on testing or auditing as their only compliance solution, and this is no longer sufficient. Resisting the compliance movement is futile.
Like their Fortune 1000 customers, distributors today are faced with some hard, objective decisions regarding whom they can do business with, and compliance programs are a big part of the criteria. It takes a village to meet the needs of Fortune 1000 companies, and those who know their role and how best to play it are winning business seven figures at a time.
Brent Stone is executive director - operations for Quality Certification Alliance (QCA), the promotional products industry's only independent, not-for-profit organization dedicated to helping companies provide safe products. A Six Sigma Black Belt, Stone has more than 25 years of in-depth supply chain management experience with extensive expertise in process design, development, improvement and management. He can be reached at brent@qcalliance.org or visit www.qcalliance.org for more information.
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