Lindsay Konzak, Author at Modern Distribution Management - Page 20 of 26

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Posts By Lindsay Konzak

Distributor advisory councils can provide a more formal avenue for distributors to add value to the channel by providing local market knowledge to manufacturers in a structured setting. This article looks at best practices in implementing a distributor advisory council and why manufacturers and distributors have benefited from participating in these groups.

By formalizing a process for increased communication and partnership, Distributor Advisory Councils are one way some manufacturers have strengthened their relationships with distributors.

Welding, cutting and safety products manufacturer Thermadyne for example started a distributor advisory council in 2005 to move from informal ad hoc meetings to a more formalized process for getting distributor feedback on markets, products and policies. Thermadyne’s advisory council meets twice a year, but other manufacturers’ councils may just meet once a year. Most have more informal contact throughout the year through teleconferences or email.

This is an exclusive summary of Part 2 of the MDM Webcast series, Build an Effective Sales Organization for the recovery, available on DVD at www.mdm.com/store. This summary looks at the role sales incentives play in driving strategy.

Distributors have to balance a number of factors when designing incentive plans for their sales force. Among them: perceived fairness, sales goals, accountability and cost.

This article evaluates challenges buying and marketing groups face in today's markets. Part 1 of this article, published in the Aug. 10, 2010, issue of MDM, looked at the benefits and evolving role these groups are playing for distributors and manufacturers.

While they have seen many successes, buying and marketing groups like other organizations that support the distribution industry face challenges in a marketplace besot by slow sales, cost and margin pressures, and consolidation.

Along with these economic challenges, about a third of respondents to a recent MDM survey on the topic said that loyalty and providing ongoing value to member distributors and vendors were top challenges.

Other challenges noted by respondents included:

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Rebates and networking are top two reasons cited in recent survey.
This article looks at buying and marketing groups’ value propositions and how they have evolved to draw and retain new members. The second part of this article will appear in the Aug. 25, 2010, issue of MDM and will focus on challenges buying and marketing groups face in today’s markets.

Dozens of organizations in the distribution industry exist with the sole goal of leveling the playing field for independent distributors. At their core, these organizations want to leverage volume through pooling distributor member purchases with a group of preferred vendors.

These buying and marketing groups continue to grow revenues to compete with the purchasing power of large national distributors. For example, NetPlus Alliance, founded in 2002, has 388 distributor members with $5.2 billion in combined annual sales. Affiliated Distributors has 530 distributor members, with a combined $27 billion in sales across six product categories. IMARK Group in the electrical sector has more than $15 billion in combined sales.

“The groups keep the independents independent,” says Susan Vinson, president of Consolidated Distributors Inc., a buying group for distributors of foodservice disposables with combined sales of $2.5 billion. “We have a lot of large chains operating in our industry. For the independents in our group to have the same advantage, they need a group affiliation.”

Many in the industry say that if these groups want their model to be sustainable, they must continue to add value that goes beyond just pricing and rebates. Adding value to the entire channel – manufacturer, distributor and end-user – is the key.

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