A New Look at Integrated Supply

Industry veteran Mort Harris: 'It's the best of times for distributors because of integrated supply.'
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Mort Harris, a veteran of some 45 years in the distribution sector, has negotiated more than 50 integrated supply contracts since the 1980s. Those contracts ranged from $150,000 to millions of dollars. Harris, one of the most well respected executives in the business and former president of a Minnesota distributorship, knows a lot about integrated supply and alliances.

\”A distributor friend of mine told me recently that this is the worst of times for distributors because of integrated supply,\” Mort told me in a recent interview. \”I responded that this is the best of times for distributors because of integrated supply.\”

Harris is in the midst of writing a book on integrated supply and alliances. His experience makes him a solid champion for integrated supply, and he has spoken on the topic hundreds of times at various seminars and workshops.

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When Harris first started negotiating integrated supply arrangements, he would generally spend 50 minutes explaining what integrated supply was and 10 minutes explaining how his distributorship could benefit that customer. Today buyers know what integrated supply is and have accepted it as they realize the savings they are achieving because of it, he says.

He scoffs at any notion that integrated supply is a fad. \”If it is, it’s a fad that has lasted more than 25 years,\” Harris says. \”The fact is that integrated supply is not going away. We’re not going back to where we were no matter what anyone says. Look at what our customers are doing today, using things like Six Sigma or lean manufacturing. There’s a reason why purchasing people today are called supply chain managers as customers continue to look for ways to lower total transactional costs.\”

When Harris first started in distribution, salespeople were just selling products. \”Sure they knew the features and benefits of that specific product but today salespeople are selling a process for streamlining costs rather than they are in selling a product. And that’s an important difference.\”

Harris adds that in the future distributors who will be successful are those who will streamline their processes and make it easier for the customer to do business with them through the use of technology.

Integrated supply, Harris says, drives down costs and improves those efficiencies. He outlined two ways to implement integrated supply arrangements: through the use of an integrator that enters into agreements with tier 2 suppliers or distributors who enter into alliances with fellow distributors, each of whom provides specific products to customers.

Harris, a former president of the Industrial Supply Association, helped found SourceOne Alliance, an alliance of distributors based in Minnesota that was very successful in negotiating a number of integrated supply agreements with some major corporations.

Trust is the key to any good alliance, he says noting that any distributor involved in such an agreement must also ensure that there is no overlapping of products.

Harris recalls that he landed the second largest contract of his career when a non-competing distributor told him about a customer who might need the products his company provided.

\”Basically it was – and is – ‘I’ll help you if you’ll help me.’ I’ve never understood why more distributors don’t work to help each other out.\”

Harris noted that integrated supply will grow in the future, and independent and small distributors should look to its benefits to gain market share. \”If you look at what’s happened in the past you see what I mean,\” he says, noting that years ago there were blanket orders that morphed into systems contracts and then into integrated supply. \”Oh, it may be called something else with some differences but it’s here to stay. And it’s up to distributors to realize that.\”

Harris is now president of Supply Chain 3, a consulting firm that works with small- and mid-sized distributors, and also volunteers at SCORE, a counseling service to the country’s small business owners.

\”Writing this book allows me to give something back to an industry I love so much,\” Harris concludes.

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