What do you do to find new ways to create and add value to your customers, suppliers, and hopefully both–every day, week, and month of the year?
What do you do that is unique and can’t be provided by any other distributor or dealer?
And then what are you doing to build on top of that?
If you don’t have solid answers to those three questions, then welcome to Camp Irrelevance where apathetic middlemen go to die. And even if you’ve got good answers, there still isn’t a guarantee things won’t change on you “just because that’s the way things work today.” I know. Me and 130 of my colleagues were personally put out of jobs 15 years ago by a manufacturer who, guess what—made the widgets and then put in place warehouses, trucks, sales reps, customer service, and AR–all things we did in our distribution business–none of which were unique. Sometimes things change no matter how good you are but you have a better chance if you make changes now.
Imagine if there are 15 steps between where products are manufactured and where they are installed or used. Distributors and dealers should get paid according to how many of these 15 steps they perform and the liability they absorb.
Now make a list of those 15 steps. Then ask if they’re unique and that you can perform them materially better than a manufacturer or third party.
- Receive products at a warehouse. Nope.
- Have the warehouse in the first place. Nope.
- Stack products on racks or bins in a warehouse. Nope.
- Do light assembly in the shop in the warehouse. Nope.
- Hire a sales team to go call on the customer. Nope.
- Have inside customer service people answer phones and take orders. Nope.
- Get an employee to pull an order and load a truck. Nope.
- Have trucks and deliver products to the right location. Nope.
- Invoice the customer. Nope.
…..and so on. You get the point.
Unless you want to take on manufacturing, you’re probably going to want to to add more steps, more knowledge, more expertise, and more value closer to where the products are used. Services galore. And, you’re going to need to find a way to take costs out, increase efficiency, and compete with others that aren’t adding the value. Those are the rules to play anymore.
And in these powerful, valued added services lays your competitive edge. And your “lock” on being an invaluable part of the supply chain which gets the customer to say “I can’t imagine being in this business without you because of everything you do to help me, my business, my bottom line, and my success.”