Robert Nadeau, managing partner of Industrial Performance Group, Inc., has noticed several trends emerge in the relationship between distributors and manufacturers.
A consultant that facilitates the relationship between these two groups, Nadeau has found that prolonged economic uncertainty, intense competition, razor-thin margins and the ever-shifting sand of government regulation are just a few of the challenges faced by manufacturers and distributors.
He states that the actions being taken by manufacturers and distributors in response to these challenges are in some instances, changing the very nature of their working relationships.
Manufacturers and distributors have both shed seasoned veterans to cut costs and their absence has created an environment where issues and concerns that were once quickly resolved to the satisfaction of both parties, now escalate into major points of contention. This has resulted in frustration, a breakdown in communication, and an increase in the level of conflict between the two parties.
Despite sluggish markets, the pressure has increased on some distributors to maintain high inventory levels. This comes at a time when many distributors are reducing inventory levels to better manage cash flow.
Downsizings and layoffs in the manufacturing sector have greatly reduced some distributors' access to information and support. This greatly hinders the distributor's ability to serve customers in their local markets. The result has been a decrease in the distributors' level of commitment to the supplier's product.
Downsizings and layoffs at the distribution level have greatly reduced the manufacturers' access to local market information. This makes it extremely hard for manufacturers to do market-based planning.
What does this all mean for your business? Nadeau believes that it's impossible to predict what the future may hold, but that doesn't preclude us from thinking about and discussing how and why manufacturer/distributor relationships are changing and evolving.
In an effort to gain a better understanding of how manufacturers and distributors are responding to the economic downturn, The Industrial Performance Group is asking you to share your opinions and concerns by filling out this brief survey. We will then publish the results and you will also be able to view them in the next issue of the Industrial Perormance Group newsletter.