Simon Kucher & Partners, a global consulting firm, released a survey this year that showed that 93 percent of distributors are currently facing increasing price pressure, far more than any other industry in the firm’s annual Global Pricing Study.

You can read about the results in the latest issue of MDM Premium, in the interview, Countering Price Pressure in Distribution.

An interesting piece of my interview with the study’s authors was the fact that even at larger distribution companies, there are challenges to implementing new pricing strategies and policies. This is especially true when looking at applying surcharges and getting paid for value-added services.

This is because leadership on the local level can vary so widely. To counter this, it’s critical that a distributor identify best practices and proliferate them systematically throughout the organization, said Matt Johnson, a partner at the firm.

“We almost always find within a distributor that has multiple locations at least one location where it’s done well, but we also almost never find a situation where it’s routinely done well everywhere,” he said.

In fact, Johnson said that at the local level, even multibillion-dollar distributors end up being much smaller business units with personal relationships with the people they are selling to. They may have done business one way for a long time and never really thought of the services that they do as valuable.

“They understand the cost of the product. They understand the margin. They don’t really understand the complete value they deliver,” Johnson said.

“… Most distributors have no way of quantifying or don't fully appreciate what the value of that is. If you can't articulate it, quantify it and describe it to a customer, you end up giving it away for free.”