In the ever-changing coatings business, distributors play a important role in business. From just-in-time procurement strategies to risk management, distributors can bring real value to customers. distributors are being relied on heavily as our customers are more likely to order smaller volumes of products on a more frequent basis. Established partnerships with distributors provide for continuity and trust of supply.
Chemical distributors are facing a wide variety
of challenges. First and foremost, similar to most of our customers and
manufacturing partners, we are experiencing unprecedented price increases for
materials, energy and transportation. Unfortunately we have little control over
our number-one cost, which is raw materials.
Fortunately, most distributors do not have the
cost structures that most manufacturers have. This is largely a result of the
size and scope of our operations. We are quick to act and more willing to take
entrepreneurial risks that manufacturers cannot.
What is the Value of Distributors?
A Customer Perspective
Customers may sometimes think, “Why do I need to buy from a middle man when I can just go direct at a lower cost?” There are several answers to this question, but the most straightforward is that either the buyer or seller in a direct relationship will have to perform the function of the distributor. This adds cost to the equation, as can be seen in several key areas.
Distributors can typically offer a greater level of flexibility than manufacturers. This includes quicker turnaround times on orders, often in as little as two hours. Most manufacturers today supply orders based on 7- to 30-day lead-times. With customers focused on increasing inventory turns and improving working capital and revenue through operational efficiencies, the distribution channel is critical to maintain inventory strategically located near the customer base.
A Supplier Perspective
In addition to the benefits already highlighted, distributors offer unique advantages to suppliers. Effective sales channel management will lead to greater profitability, increased market share and higher customer satisfaction. Distributors can be viewed as an extension of a supplier’s sales force in markets where it is not economically viable to establish a permanent facility or direct staff.
Although there are significant challenges that
distributors face, today’s economic environment affords an opportunity for
significant growth. Distributors offer several advantages to both customers and