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Channel Interdependence Panels

Safety Week 2003  •  July 28, 2003  •  Miami, Florida

Safety Week 2003 featured two distinguished panels of leading safety equipment manufacturers and distributors who were asked to comment on the state of channel interdependence in the safety industry today, and what channel partners could do to foster better relations.  The manufacturer panel, moderated by Craig Lindsay, Pacesetter Sales, included the following panelists:

            Mark Johnson, VP Sales & Marketing, SPC Inc.

            Mike Moorefield, Sr. VP, Marketing, Bacou-Dalloz

            John Kehoe, 3-M

            Charles “Sid” Ellis, President, North Safety

George Hayward, United Sales Associates, moderated the distributor panel.  It included:

            Ted Cowie, President/COO, Safety Today

            Gary Guertin, Corp. Promotions Manager, Northern Safety Co.

            Bud Orr, CEO, Orr Safety Corp.

            Steve Spahr, President, Sanderson Safety Supply

The sponsors of Safety Week 2003 want to thank all of the panelists for their participation and candid responses during the session.  We also want to thank the moderators, George Hayward and Craig Lindsay, for all their work in organizing these excellent panels. 

Panelists addressed the following questions posed to them by the moderators.  Key observations are included under each question.

What could a manufacturer/distributor go back to their office and change today that would help distributors/manufacturers be more profitable?

Bud Orr 

  • Provide incentives to the manufacturers’ sales force and manufacturer reps for things they do to support distributors.
  • Align sales strategies better.
  • Practice Balanced Scorecarding—understand there is more to success than just the sales dollars generated.
  • Integrate Technology—use customer data gathered to develop joint marketing plans.
  • Provide technical training to distributor sales people and coordinate focus on targeted industries.

Mark Johnson

  • Consolidate suppliers in a strategic manner; don’t just align with the largest in each product category.
  • Get the manufacturer involved in the sale; can help to overcome customer demand for a particular brand if the product is the functional equivalent.
  • Buy the way you sell—you will become more important to your vendors.
  • Differentiation—each distributor has to bring their own value equation to the customer; pricing, service, etc.

What are the greatest concerns you have about safety equipment manufacturers/ distributors today, and how would you suggest changing them to positively affect all channel partners?

Gary Guertin

  • Lack of communication between manufacturer/distributor/end user.  Need to learn as much as you can about channel segments.  Survey distributors more to get feedback on markets.  Assign a project manager to each channel to learn, survey and give feedback. Plan 6-12 month product promotions between manuf. and dist.
  • Better training for manufacturer sales reps. Make sure they are fully informed on product changes.  Have them make on-site visits to distributor operations and meet with different departments to understand challenges each have. 
  • Domestic manufacturers are losing market share to importers.  Have to keep up with price points and styles; shorten lead times; more reliable shipments; help distributors turn inventory; develop more innovative products; improve order accuracy; be more flexible in customizing programs for individual distributors and markets.

Mike Moorefield

  • Safety equipment distributors are not making enough money. This is a concern to manufacturers because they need channel partners who are healthy and can help them grow.  The problem stems from lower gross margins due to hyper-competition, and offshore sourcing which has led to product price deflation.
  • Distributors need to unbundle the product knowledge services they provide to customers so that they can get value for the service they provide, i.e. respiratory fit testing, fall protection training.  Distributors give away too many services to customers.  Look at models from other industries; FEDA (Food Equipment Distributors Assn.) members offer training to restaurants on safe food handling.
  • Distributors not providing optimum product mix. Manufacturers set up more distributors than they need/should.  Distributors carry too many similar products.  Need to eliminate unproductive SKUs; be disciplined in SKUs carried, i.e. have good-better-best categories of products.

What are your specific expectations of manufacturers/distributors today as it relates to a) inventory, b) sales initiatives, c) communications, d) information sharing?

Ted Cowie

  • Inventory  Segment inventory to have consistent supply available.  A&B products should be available on a 24-48 hour basis; C&D items 7-10 day availability. Use technology to help distributors understand production schedules and manufacturers understand distributor demand. Be more flexible with ordering policies and procedures; understand that different distributors have different needs. Improve order accuracy.
  • Sales Initiatives  Develop collaboratively with distributors.  Don’t just focus on sales reps., but look at the strategic goals of the distributor also.  Increase use of advisory boards.  Make sure product is available to be shipped when product launch is announced.  Sales reps should have a specific game plan when doing distributor ride-along programs; better planning makes such efforts much more valuable.
  • Communications  Communicate product attributes, changes, etc. much deeper within distributor organizations.  Price changes should be communicated in advance and by electronic means.  Need better communications on senior management level; let distributors know about internal changes made within organization.

John Kehoe

  • Inventory  Distributors should have an adequate supply of A (high turn) products on hand to meet needs of customers when they need them.  Biggest challenge is with C (low turn) items; need better coordination between manufacturers and distributors on how to have adequate inventory levels of these items.
  • Sales Initiatives  Lots of redundancy in past between manuf. and dist. sales forces.  Suppliers will have more reliance on distributors for sales function across all customers.
  • Communications  Cornerstone of success between manufacturers and distributors.  Need better communications with managements teams, not just sales and marketing.  Distributor has important role in developing market knowledge; data on customers.  Distributors who help manufacturers develop this will be more valuable channel partners.

What long-term adjustments for manufacturers/distributor are necessary for channel partners to satisfy end-users?

Sid Ellis

  • Need “3-legged stool” approach—include end-users in the partnership with manuf. and dist. Have three way meetings that discusses what is driving problem that end-user has and helps find solution.
  • Customer needs to have product on time, requiring planning and forecasting.
  • Customer needs product value—demonstrate at the plant that product solves customer need.
  • Must convince management level that safety pays; lost time costs money.
  • Sales force—has to be solution providers, not just order takers.  Analyze hazards and recommend solutions.

Steve Spahr

  • Manufacturers and distributors need better business partnerships to understand the needs of end-user customers.
  • Better product training for distributor sales people
  • Work cooperatively to gather data and target industry segments.
  • Develop common protocols to facilitate electronic order processing.
  • Make product information available electronically.