Fact or Fiction? Suppliers Are Providing Distributors More Value Today Than 5 Years Ago

Are suppliers really providing distributors with more value today than they were five years ago? We’ve heard people talking about this topic, so let’s take a look at this statement and explore if it’s fact or fiction.

This statement can be argued both ways. But we believe that suppliers are, in fact, providing more value to distributors today than they have in the past.

In this article, we’ll look at what suppliers are currently doing that makes that relationship better. Of course, the other side of this argument is relevant too, and there are things manufacturers could be doing to help their distributors even more. With that in mind, below are a few specifics.

The Value of Manufacturers

In recent years, the relationship between manufacturers and distributors has been evolving. Manufacturers are providing more value to the distribution channels. They’re carrying inventory and offering better terms to do the heavy lifting, which helps to relieve some of the burden for distributors.

Suppliers are also contributing to market pull-through by responding to market demand. Most of our clients understand that the value they’re providing today is proportionate to the value they provided five, even ten years ago.

That’s not insignificant.

On the other hand, manufacturers could further support distributors by helping them scale their technical competence to their own customers. The progressive suppliers are developing really insightful tools. It allows them to take a highly technical product or solution, provide the training and engagement tools to a distributor, which results in effectively pushing that message out to their broader end customer base.

For example, self-assessment tools, configure price quotes tools, and videos on training that go through product demonstrations are all great tools for a distributor to deploy. But they’re also very relevant to distributors and customers today who are trying to self-serve or self-educate themselves through that buying journey process.

Innovation is another crucial area that manufacturers can bring to the table. By working together with the distributors, manufacturers can jointly bring innovative solutions to the market that improve the overall customer experience.

The Value of Distributors

To rebalance the value provided by both parties, distributors need to reset what they bring to the table as well. This can be done without sacrificing their value to the end customer. The last thing you want is for one of those relationships to come at the expense of the other.

Instead, try to create a balance that benefits both.

Distributors can bring field experience and a deep understanding of the market to the table. Their data and insights on buyer behavior can be incredibly helpful. They can also bring innovation and technology in collaboration with the manufacturer.

That’s number one – unbiased, deep understanding of the market. It needs to be unbiased because that’s imperative to data.

For instance, beyond point of sale (POS) data, beyond Company A, why did a customer buy something on Tuesday? It was $100 at X place. They’ll want to know that behavior, and what motivated that buyer to behave that way at that time. Was it the innovation? Was it the availability? What was it specifically? We see examples of this all the time. The key is to return to the question of how you can bring value back to the manufacturer in a meaningful way.

The Center of the Relationship

Ultimately, the focus should be on the end customer and how they can benefit from the collaboration between the manufacturer and distributor.

Putting the customer at the center of the relationship allows manufacturers and distributors to reevaluate what they bring to the end user. By working together, both parties can provide a more comprehensive customer journey. This leads to longer and more defensible relationships with the end customer.

As you build this working relationship, look across the whole lifecycle of a customer/buyer journey. This information and data can be used to help that customer understand what product they could use and benefit from.

The distributor can support that product, helping them make it easy to get, easy to service, and easy to upkeep. This is a great example of how they can work together to make sure they’re serving their customers and each other effectively.

In conclusion, it is evident that manufacturers and distributors need to have a more balanced relationship today than in the past. With the customer at the center of the relationship, the manufacturer can provide technology, innovation, and support. The distributor can bring back deep customer knowledge and data. This creates a mutually beneficial relationship where both parties gain and have a more equal risk-reward relationship, leading to business growth and stability that is a win-win for everyone.

Thoughts? Questions?

As always, feel free to reach out to talk in greater depth about these and other issues impacting your business.