Many of us have had first-hand experience with a contractor or two who wants to work directly with a manufacturer by cutting out the middleman — the distributor.
Some believe that by cutting out the distributor and obtaining a direct RFP from the manufacturer the product comes at a lower price. But they would miss out on the benefits that distributors offer. These benefits include special handling and stocking services; terms and conditions; local coordination and logistics; storeroom and inventory management; expedited shipping; submittals; on-site lighting and gear management; staging product for multiple drops on a project site; project tracking; adherence to special security clearances for top-secret projects; and credit/financing options.
These are just a few of the benefits distribution offers. The value of distributors cannot be measured by one value-added service at a time, but as a complex offering — the entire package. The personalized services and solutions that meet contractors' needs so completely are incredibly valuable. So why is it so difficult to identify the value of distribution, and why do contractors still sometimes want to remove the middleman? The answer is simple: Everything distributors do beneath the surface isn't always easily seen.
Kitting: Hidden Value #1
Kitting is a huge asset to contractors, and it's one of the most beneficial services distributors can offer. Distributors will perform kitting in their own facility to consolidate pallets and materials — even from multiple manufacturers. All products necessary for any given project are kitted together and ready for use, so when the pallet arrives to the job site, the contractor simply has to cut off the shrink wrap. Kitting saves the contractor valuable time and money, and adds unparalleled organization and efficiency.
Local Logistics: Hidden Value #2
The idea that contractors pay a premium for the local relationship facilitated by distributors is actually a misconception. In reality, distributors are expediting on behalf of the contractor. Each unique project has a different set of special circumstances, such as special blocking requirements, specific markers and drivers or even special security clearances. Distributors make sure the deliveries arrive on time and according to the job schedule. They track the project, proactively instead of reactively, offering those personalized local logistics that nearly every project requires.
Education: Hidden Value #3
The hidden value of education is arguably distributors' best value offering. Manufacturers simply do not have the resources to get out in front of every person in the marketplace. But distributors have salespeople in every role, and, most importantly, the field salespeople who can make the greatest impact on customers. Distributors bring new ideas and solutions to the table and serve as problem solvers, helping customers learn about and use new products they wouldn't necessarily have realized they needed.
The person making the deliveries, the truck drivers, the salesperson behind the counter — these are your problem solvers. They can show installers, property owners and electrical contractors which products can add value to their project — the products that can solve their problems, lower costs, reduce energy consumption and more. Electrical distributors are the ultimate solution providers, strengthening the relationship between the contractor and customer, and in turn increasing the amount of business coming in the contractor's door.
The secret value of electrical distributors is unveiled when they promote and embrace all that they do. Distributors are the logistics coordinator. Distributors are the trusted consultant. Distributors are the educator. Distributors are the solution provider. Distributors may cost more upfront, but the benefits contractors reap over the lifecycle of a project are truly invaluable.
The author is V.P. of JMC Steel Group's Electrical Division. He manages the company's electrical portfolio of products manufactured under the Wheatland Tube and Picoma brands. Hayes is also responsible for the marketing and business development activities associated with Wheatland Tube, Atlas Tube, Picoma and Energex Tube to help drive both short- and long-term profitable growth.
He was born and raised in Chicago, and earned his BA in finance from Loyola University (Chicago) and his master's degree in marketing and accounting from DePaul University.