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Speaking Out: The Value of Distribution

Feb. 3, 2017
When thinking through your channels to market, spend some time on both their form and function.
Desirée Grace, Anamet Electrical Inc.

To quote Nobel Prize-Winning poet and song-writer Bob Dylan, “The times they are a-changin.” Yet, the more things change, the more they stay the same. As we move past planning for 2017 into executing for 2017, like most manufacturers, I am sure, my thoughts move to “The Channel.” With the increased acceptance and use of the internet for research, search, and procurement, many believe the importance of the channel is decreasing. I disagree.

The channel serves many vital functions to both the customer and the manufacturer. While the form of the channel may change, the functionality does not. Let’s review, from a customer and manufacturer perspective, what value the channel performs.

Feet on the street. The channel, whether it be retail, wholesale, or another form, often offers an educated sales force. This sales force, in its best form, is a trusted advisor, educated on their products and services, as well as the customer’s business. This translates into curated recommendations best-suited to the customer’s needs. This is a tremendous time-saver and value to the customer. The product assortment and selection offered has already been pre-screened for quality, performance, longevity, ease of use, etc. In addition, there is the technical expertise and training invested in the selection and the salesperson.

Local logistics. From a logistics perspective, the channel stores, delivers, kits, labels and transports the goods and services to the required location, whether it be the job-site, the exact point of use, or the remote customer location. Stop and think about the personnel and time required to accomplish all those necessary functions. Also, think about the economies of scale derived from combining assorted manufacturers into one shipment or one package. Now, imagine, as a customer, trying to arrange separate and distinct deliveries of each.

A financial buffer. Finally, the financial impact cannot be under-estimated. The channel, in most cases, absorbs the financial risk. They finance the customer, extending payment terms for special projects, and often, with intimate knowledge of a customer, make exceptions that can make or break a relationship and/or a business. How many times have we heard of the tremendous loyalty of a contractor to a distributor who helped them out financially during a start-up or a tough time? We have also heard the inverse — the distributor left holding debt after a business failure.The manufacturer, usually, has already been paid on time and moved on to other concerns.

These are the primary functions performed by the channel — the functions that add the most value to their partners in the supply chain from manufacturer to end-user — but they are not the only functions. There are others, such as supply chain optimization, custom assemblies, and other value-added services. Whether the form of the channel is brick and mortar, down the street, or across the country, reached by phone or the worldwide web, the value the channel provides has not changed.

I suggest we look at sales execution and value creation for 2017 with an eye to the changes in the form of the channel, not changes to the value it provides. The value provided still exists and always will.

As part of our 2016 planning, we reviewed our channel’s web strategy. The range of strategy was astounding. We found out-of-date logos, incomplete information, incomplete product lines, and other basic errors in presentation. A hard-copy catalog did a better job of representing our solution set, as well as our channel’s capabilities. Some even lacked mobile-compatible websites, in spite of the fact that mobile commerce was expected to grow 300% faster in 2016 than traditional e-commerce. The opposite also exists. A select few offered a range of purchasing options, such as credit card capabilities, online shopping carts, options for customization, delivery options, and more. We challenged our channel partners to up their game and improve their web strategy, not only to better their chances of selling our solutions, but also to improve their chances, in general, of serving their customers who chose the internet over brick and mortar. There are many industry tools available, such as the IDW, to facilitate adapting to customer choice in procurement.

We plan to re-visit the 2016 discussion while planning for 2017, reviewing who has improved their form and who hasn’t. Those channels that have done nothing do not inspire confidence, while those who have made strides, do. Even if a channel partner hasn’t completely upgraded how they go to market, positive changes do inspire confidence. Who doesn’t want to be part of a winning team? The team that wins is the team that adapts to changing market conditions. The form is what needs changing, not the value or functionality. To conclude, I’ll end this with another Dylan quote from the same song: “You better start swimmin’ or you’ll sink like a stone.” The changing times, and customers, demand it.

Desirée Grace has been V.P. of sales and marketing at Anamet Electrical Inc. for more than three years. Prior to that she was a district sales manager at Panduit. She started her career with WESCO, beginning in inside sales and ending as branch manager, before moving to Panduit. Grace earned her MBA from the University of Iowa, with concentrations in marketing and operations and has an  undergraduate degree is in accounting from Augustana College.  She is also an adjunct faculty member in the business departments of  Augustana College and St. Ambrose University. You can reach her at  by e-mail at  [email protected] or by phone at 309-737-2199.