Best practices” is always a bit of a tricky term to use. There doesn’t seem to be one single answer to what is the best strategy
for every business to take, and certainly not for
every distributor. Distributorships are as different
as they are similar, with factors like their physical
location or region, whether they are publicly held
or privately owned, and what kind of product
lines they carry all affecting how being successful
is defined for them.
However different distributors are across the
country, there are still some consistencies that
they all point to every year in the Survey of Distributor Operations that help them be the best
at what they do.
For the past five years, survey respondents
have ranked quality as the most important factor
above all else when evaluating suppliers with
which to do business. Respondents get to choose
“up to three” of the options, and quality is con-
sistently the highest ranked. Eighty-seven per-
cent of those surveyed this year said that quality
was the most important criteria, a percentage
that has held steady – within two percentage
points – for the last five years (see Figure 1). Even
in the midst of economic crisis, when margins
were shrinking faster and the competition was
getting tougher, distributors never wavered in
their decisions to carry quality product, and that
is probably one of the many factors that have
kept so many distributors in business during this
time in history.
Which of the following do you consider to be the
most important criteria when evaluating suppliers?
0 20 40 60 80 100
How has your relationship with your suppliers
changed in the past year?
It’s gotten better
It’s gotten worse
It’s stayed the same
0 10 20 30 40 50 60
been working with them more consistently in recent months. If more suppliers have
been proactive in doing this, it could be that this is a factor that is more universally
acknowledged and less of a deal breaker in the manufacturer-distributor relationship. The reputation of the supplier was a factor that lost four percentage points from
last year’s data, ranking as important with 28 percent of survey respondents. This
could also indicate a more level field of suppliers to choose from as a tough economy
weeded out some of the less desirable companies with which to partner.
Price came in fourth on the list, behind service and support and ahead of reputation. Fifty-two percent of respondents indicated that price was one of the three most
important to them, a number that lost three percentage points from last year, and a
total of fifteen percentage points since 2009. That price doesn’t top the list in such
a competitive market is surprising, especially considering this low-margin industry.
However, as previously mentioned, distributors are not willing to sacrifice on quality