Four basic issues drive unnecessary costs in the sales/distribution channel: fixing mistakes, expediting orders, holding excess inventory and wasting time waiting.
Meanwhile, margins grow tighter. Sales and marketing costs rise. Profits fall.
Roughly 82% of manufacturers and 92% of distributors reported sales performance and profitability were hampered by these problems, yet only 3% took action to eliminate them. Only 17% of distributors said they had clearly defined goals and plans with manufacturers.
There's a real cost to the ongoing dissension and conflict. Some sources indicate it can represent 20% to 40% of the bottom line. The good news is, whether you're a manufacturer or distributor, there are steps you can take to improve this crucial business relationship and make it more profitable for everyone involved.
To learn more, read the full article, Sell More: 4 Key Steps Solve Manufacturer & Distributor Conflicts, which is featured in the Manufacturing & Technology eJournal (mfrtech.com). Bob Chapman and I co-authored the article, and we're working on a white paper about this challenging issue.
Are you involved in a manufacturer-distributor relationship? What aspects are working well? What aspects hamper productivity and profits? If you care to share your insights, challenges, comments and questions, we'd be interested in hearing what's working and not working for you.