Helping Manufacturers And Distributors Improve Sales Performance And Profitability • 800-867-2778 • Issue No. 45

Robert Nadeau
Managing Principal
Manufacturers and distributors
can improve financial results
with the right kind of conversation

The right kind of conversation between manufacturers and distributors can improve financial results for everyone. But many manufacturers and distributors are talking less and going it alone, rather than working together.

This threatens the livelihood of everyone in the distribution channel, especially when they all face the same economic challenges. But by changing the way they communicate, manufacturers and distributors can grow their businesses -- even in tough times.

Manufacturers and distributors face the same pressures

Over the past several months, I’ve spoken with business owners, trade association managers and media contacts, learning more about what is happening in various industries. Thank you to everyone who shared their ideas and concerns with me.

It’s clear that manufacturers and distributors across many industries face the same challenges:

• A sluggish economy

• Rising costs

• Fierce competition

• Consolidation

• Intense downward price pressure

• Not enough qualified workers

On top of all this, there’s still heavy pressure to get the numbers. Some sales managers are being asked to increase sales by as much as 18 percent.

Many companies are mistakenly going it alone

During difficult times, one might hope that manufacturers and distributors would try to get the most out of their partnerships.

Evidence shows that this brings important rewards:

• Additional revenue, because salespeople spend more time selling and less time fixing problems and mistakes

• Higher profit margins, due to lower costs and less discounting

• Better information, which leads to better decisions and fewer hassles

But many companies are responding to tough times by going it alone.

Manufacturers and distributors aren’t having the right kind of conversations

Manufacturers and distributors do talk to each other, of course, but they often have different goals in mind:

• Visits to distributors – Manufacturers often send regional or territory sales managers to visit distributors. They may gently suggest to distributors that they hold more inventory and pay in a more timely manner.

But distributors have their own goals, and one of these is reducing costs. When asked about buying more inventory, a distributor might respond that they’ll hold more inventory if the manufacturer lowers its price.

The distributor might also complain about hassles from the manufacturer like shipping delays. But the manufacturer’s regional or territory manager usually isn’t empowered to solve these types of problems.

• Annual meetings – Manufacturers and distributors also meet at annual distributor meetings held by manufacturers. This is a great time to learn about new products, but it’s often a lost opportunity for working together on ways to improve financial results.

• Trade association meetings – Manufacturers and distributors enjoy networking and catching up at trade shows and association meetings, but there is also unmet potential here for a productive, problem-solving dialogue.

Asking the right questions can make your conversations more productive

When manufacturers and distributors meet, they should ask these questions:

• What can we do to sell more? – Distributors who sell more order more inventory -- and make more money for everyone.

• How can we improve profits? – If distributors can defend higher asking prices with their end-user customers, they’ll earn more on every sale. They won’t be as concerned about getting lower prices from the manufacturer. And with better margins, they’ll have better cash flow which makes things a lot easier when the invoices come due.

Manufacturers and distributors can also boost profits by working together to reduce waste and inefficiency.

• What information do we both need to make better, timelier decisions? – Good information, flowing in both directions, prevents costly and time-consuming hassles like shipping delays.

More productive conversations improve financial results

By asking these questions, manufacturers and distributors can get more out of the time they spend together.

• Visits to distributors – Regional or territory managers should consider occasionally bringing along a senior manager when they visit distributors. This senior manager should have the authority to respond to distributor concerns. The purpose of this is not just to “make nice” with the distributor, but to solve problems that are costing everyone money.

• Annual meetings – A manufacturer’s annual distributor meeting is a great time to ask the questions above and make decisions that benefit everyone.

• Trade association meetings – A panel discussion at your next trade association meeting is an effective way to address and solve common problems.

All this will require a new kind of conversation, which will seem a bit awkward at first. This is where outside help can make a difference. A skilled facilitator can help you get these conversations started and keep them going in the right direction.

The Industrial Performance Group can help

The Industrial Performance Group can help manufacturers, distributors and trade associations start the right kind of conversation.

There is no charge to call and discuss your company’s situation. I’ll provide you with free additional information based on our extensive research.

Feel free to call me at 800.867.2778.

Robert Nadeau

About the Industrial Performance Group
The Industrial Performance Group specializes in helping manufacturers and distributors increase sales volume and improve profitability in supply chains and distribution channels. The company offers sales training, meeting facilitation, management seminars, consulting and other services, as well as a wealth of information at For more information, call 800.867.2778.

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