Delivering for Best-in-Class Wholesaler-Distributors
May 3, 2017  |  ByRick Wilson, NAW Institute for Distribution Excellence Author
NAW-Leave Your Distribution Comfort Zone and Stop Commoditizing Your Business

Something is eating at the heart of strong legacy B2B supply and distribution systems and it isn’t just a hangover from the tough recessionary economy of the mid 2000s. Commoditization is escalating, margins are declining, new product innovations are finding it hard to reach early adopters, brand equity is deteriorating, suppliers and distribution partners are achieving less collaboration, and growth aspirations are increasingly being yoked to e-commerce and other discount channels.

New research from Chicago Strategy Associates and NAW shows how this commoditization trend is not inherent to product lines of trade, but is driven instead by a lack of clear, differentiated alternatives from legacy manufacturers and distributors in the marketplace.

In the absence of tight collaboration, regular dialogue, and aligned business goals, these companies are not realizing the coordination benefits they seek in their partnerships, and worse, are failing to improve outcomes for end customers. It is in this light that we see the seeds of commoditization and price deterioration taking hold—and thriving.

In fact, the downward spiral of policies and practices put in place by both manufacturers and distributors to preserve volume during the recession has fueled marketplace commoditization. And the end-customer experience deterioration that results from commoditization is destroying manufacturer brand equity and distributor reputations, and is increasingly leaving these B2B end customers frustrated that their own business challenges are not being addressed.

Our newest white paper ­– Leaving Your Comfort Zone: New Insights to Strengthen the Critical Distributor–Manufacturer Partnership – reveals the 10 key steps of building the next generation of mutual trust and commitment required to move manufacturers and distributors outside the comfort zone of their long-held legacy beliefs and conventional relationship models.

You’ll learn how the bottom line for distributors and manufacturers alike could not be clearer: The need for greater discipline, tougher choices, and stronger and more mutually beneficial relationships in distribution is now mission critical. But this outcome will only occur if both sides develop and stick to more strategic, mutually beneficial policies and relationships.

Partnerships between product or service providers and distribution channels that routinely exceed the expectations of end users have one trait in common: They closely coordinate omnichannel policies, practices, and activities to create finely tuned, integrated, high-value experiences for end customers. Respecting each other’s independence, these partnerships hum along seamlessly as though one company.

The good news is that when distribution relationships are carefully coordinated, the profitability of the entire system of players is optimized. End customers experience dramatically improved outcomes, differentiation increases, brand equity rises, and working relationships become more durable and sustainable. The path forward is not complex or abstract, but it does take strong leadership, solid strategic thinking, and prudent risk taking to improve and strengthen these relationships.

Did you enjoy this article? For more on this subject download the white paper to
Leaving Your Comfort Zone: New Insights to Strengthen the Critical Distributor–Manufacturer Partnership

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Rick Wilson, NAW Institute for Distribution Excellence Author

Rick Wilson, NAW Institute for Distribution Excellence Author

Rick Wilson, Managing Director of Chicago Strategy Associates, is a long-time adviser and researcher on structuring and managing distribution systems and relationships to drive differentiation, growth, and competitiveness. He researches and advises on emerging developments in customer experience engagement, multichannel routes-to-market, and new online distribution technologies. You may reach Rick at rick@chicagostrategy.com.
Rick Wilson, NAW Institute for Distribution Excellence Author

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