A recently published research report on eliminating waste in the electrical channel explores the delicate balancing act manufacturers and independent manufacturers' reps must maintain to create demand for and sell electrical products, but at the same time keep a steady flow of accurate information about these business transactions flowing to all channel partners.
Sponsored by the National Electrical Manufacturers Representatives Association (NEMRA), Tarrytown, N.Y., and the NEMRA Manufacturers Group (NMG), “Eliminating Wasteful Activities in the Representatives & Manufacturer Sales and Marketing Channel,” is intended to help channel participants become more productive and profitable by eliminating wasteful activities.
NEMRA President Hank Bergson said profitability in the electrical industry depends on an efficient and effective use of resources, and that by focusing on the relationship between reps and manufacturers, NEMRA has uncovered significant business functions where productivity improvements are necessary and possible. He said the study, which was conducted by Tom O'Connor, president, Farmington Consulting Group (FCG) LLC, Farmington, Conn., will help manufacturers and reps refocus on their primary mission — selling products, and gaining and retaining customers.
“NEMRA's mission with this project is to take this study forward and develop tools for reps and manufacturers to be more efficient and effective, and to serve as the catalyst for behavioral change that will lead to a more productive and efficient relationship between reps and manufacturers. We're aware that the change we're looking for is difficult because it takes people out of their comfort zone. NEMRA is committed to continuing this research, and encouraging a staged and methodical process so people can make well-informed business decisions that will benefit all participants in the channel.”
The study found that electrical manufacturers recognize and appreciate the strong local relationships that reps develop with distributors, and that reps recognize and appreciate the quality of the products that their manufacturers bring to market. However, both reps and manufacturers acknowledge much can and should be done to improve each other's performance in the marketplace.
Said Farmington Consulting Group's O'Connor, “The electrical distribution channel is facing the challenges of competition from globalization, growing DIY threats and continuing consolidation among manufacturers, reps and distributors. Each channel partner needs to take a hard look inside their own organizations to evaluate and improve upon the efficiency of their supply-chain processes. Conducting this research study, we have found that there is much that can and should be done to improve the performance of manufacturers and their reps in the marketplace.”
When asked about channel waste, manufacturers and reps identified more than 20 specific areas that needed to be improved. NEMRA is developing a task force to attack each of these problems. Systems integration is an area reps and manufacturers plan to attack first. Respondents said because data is exchanged inefficiently amongst electrical distributors, reps and manufacturers, field salespeople, order-entry and customer service personnel and inside salespeople are required to perform slow, labor-intensive, error-prone manual activities when they should and could be providing value-added services.
One wasteful activity identified by the study is the manual order-entry that comes with the continued use of fax as a primary means of communications. Data on faxes must be rekeyboarded into the business partner's system.
Another concern is the relatively small number of distributors, manufacturers and representatives that make efficient use of EDI transactions even though EDI has been talked about in the electrical market for at least 20 years.
NEMRA's Independent Representative Information System (IRIS) came under fire, too. The association plans to research why some manufacturers and reps are slow to adopt and use IRIS, a business software program that NEMRA developed for its members.
Copies of the study have already been sent to NEMRA and NMG members, as well as to members of the Canadian Electrical Manufacturers Representatives Association (CEMRA). To get an electronic version of the 30-page study, contact NEMRA headquarters at (914) 524-8650 or e-mail Hank Bergson at [email protected].
The author is president of Foster Communications, Trumbell, Conn. During his many years in the electrical industry, he worked for the National Association of Electrical Distributors (NAED) when it was based in Connecticut. He is editor of Agency Sales magazine, published by the Manufacturers Agents National Association, Lake Forest, Calif.