Here We Go Again...

Some topics never really go away. Like "the wave" in a stadium, an issue comes around... there is a lot of standing up, screaming, arm waving, then it passes by just as quickly as it came.

But like the wave, it doesn't mean the arm waving and conversation on a hot topic isn't important to have once in a while. I know this has been addressed before, but based on the fervor over this in multiple discussion forums, it seems worth revisiting again.

The topic making the rounds is the current challenge to the longstanding supplier-distributor relationship model our industry is accustomed to. Yes, this IS a tired topic. Business strategies are always changing, which is expected, and the longstanding supplier/distributor/end-user model most of us are comfortable with is also changing.

We are in a competitive industry. Each of us, suppliers and distributors, are doing what we can to create business. When you have a supplier that sells direct to the end-buyer at pricing at, or below, a distributor's cost, it's frustrating. Conversely, many distributors will bypass suppliers on larger orders, going direct to the manufacturer. That's frustrating for the suppliers.

There are pros and cons for both. Going direct increases margins for each side, but is not without risks. Distributors need to deliver quality, safe products, which many of our domestic industry suppliers are able to provide. Established industry suppliers are better prepared to be in compliance with product safety requirements. Distributors are not in a position to control this part of the production process. Suppliers need to deal with the challenges of working with end-user buyers.

We can't ignore that price is important to our clients. I continue to believe that a good distributor with quality relationships can overcome many price issues with creativity and other value added benefits. But price is a factor. Some suppliers have direct sourcing programs that offer competitive pricing, making the margin argument for going direct less valid. Distributors and suppliers are experts at what they do. When any of us cross the lines of the supplier/distributor/end-user model, the results are often not what we hoped.