POS data can you operate more efficiently. But nothing will happen with POS data unless reps, distributors and manufacturers establish a mutual trust.
By Michael Johnson, CEO, InfoNow, Denver, Colo.
The need for accurate and timely point-of-sale (POS) information for the electronic, plumbing, and other distribution-based industries is well documented, and several of these industries have made great strides in this area.
However, the electrical wholesaling industry seems to be having the hardest time in getting its arms around the POS dilemma. Electrical distributors are afraid that if they share POS data they could face disintermediation and endanger their role in the channel. Electrical manufacturers say the data is too unwieldy to use effectively.
POS data can eliminate this conflict and enable manufacturers and their channel partners to profitably grow their businesses. Here's a case in point. Compensating independent manufacturers' sales reps for channel sales is a source of conflict in the electrical business. If the comments at a recent meeting of electrical manufacturers and independent manufacturers' representatives are any indication, it's a concern that must be resolved if the electrical market hopes to eliminate inefficiencies and maximize its productivity.
One indignant manufacturers' representative spoke for many others when he said, "There is definitely an issue with some manufacturers not paying based on point-of-sale. Every distributor that I call on tells me they make an effort to provide the information for manufacturers, but the fact remains that some of us are not being paid properly. In one instance, 30 percent of the sales we do with a distributor aren't being credited to us."
A manufacturer at this meeting countered that while some distributors provide POS information, it's often inaccurate, incomplete or late. "I wind up paying an incentive on sales that occurred three months ago," he said. "I know the rep would rather receive his commission late than never, but it's crazy."
Another electrical manufacturer said a remedy exists to the situation. He believes there isn't a CEO in the electrical wholesaling industry who wouldn't react if a group of the reps his company works with would voice their concerns about POS data. If reps voice their dissatisfaction and let manufacturers know they're not going to continue business as usual, changes will be made.
I'm surprised by the inability of the electrical industry to overcome this problem. By not gathering and using accurate POS information, manufacturers and their partners are creating dissatisfaction and conflict. More to the point, they are missing real opportunities to grow their businesses. By collaborating to unlock the value of their POS data, manufacturers and their partners can capture previously unimagined benefits well beyond timely and accurate commission payments. Here are examples of the biggest benefits.
Rich customer intelligence. POS data can help business partners segment end users by vertical market, business size and other important dimensions.
Targeted end-customer marketing. POS data identifies customers, what they are buying, and their source of supply. Manufacturers and their partners can use this data to develop highly targeted channel campaigns.
Inventory tracking. POS data can help participants balance inventory, develop special promotions to increase inventory turns, and improve forecasting.
Here's the bottom line. POS data gives you the information you need to better understand and serve your customers and profitably grow your business. It's time for the electrical wholesaling industry to get on board.
The author is CEO of InfoNow Corp., Denver, a software and services provider that offers data on channel sales, including enhanced market intelligence on partners and end customers.