This was  a special report I created for the 2010 International Manufacturing Technology Show exhibitors.  ​I'm reposting it here for the 2012 IMTS Show exhibitors.

If you are selling through a distribution channel then the DISTRIBUTORs are the FIRST customer who’s needs you should meet. I’ve seen many manufacturer’s who have great products, great catalogs, and yet they can’t figure out why they are not selling more.  Somewhere there is a hurdle.  

Sometimes the hurdle is in the last place you might expect because you don’t see it every day or feels it’s effects personally.
​
You’ve paid for the catalog, you’ve paid for the marketing, you’ve found a good distributor, you had a great sales meeting and the outside salespeople are excited to go show their customers your product.

What happens next?
The end-user customer asks for a quote. Now that goes directly to the inside people at the distributor. They now have to create a quote, and when they do it,  they don’t want to have to enter the same information over and over again. If one customer wants something “just like my buddy Joe got at his place” they have to standardize.

Here’s a couple of cases where the manufacturer slipped up:

Distributors work with many many manufacturers and are very familiar with how jobs are “routed” through a facility. So when a distributor talks to a vendor and the vendor says “If you want it in black just add a “B” to the part number at the end. If you want it in Gray – just add a “G” There is no charge extra for that either, just add a “G” to the end. That’s what our guy use on the floor”

Aside from the above discussion about how computers would understand a “-G” vs. a “.g” there is a larger perception problem in play here. What may seem like a rather simple way to designate what color you want actually raises a big red flag for the distributor. They know that the way one person writes a “G” could look like a “B” to another person.

Even if the “guys on the floor” know enough to ask someone to double check, distributors know how important accurate information on the floor of a plant is to efficient delivers. It’s the real basis of “lean” “SPC” “ISO” etc. Again, what the manufacturer perceives as a “simple easy to use, ‘just add a letter’ system” what the distributor hears is

​“Our shop routing process is a real mess so this vendor is probably going to be late or mess up an order at some point. I’ve got to keep an eye on them”

For further Reading check out: The Future of Industrial Classification: UNSPSC

“We’ve been doing it this way for years and no one else has complained”  If I’ve heard that once I heard it a thousand times.  Maybe, they stopped complaining years ago and maybe, just maybe, your never even heard the complaint.  Let’s look at some dollar and cents.

If someone at an end user keys in an order and faxes it to a distributor, that distributor keys in the order and faxes it into the manufacturer.  The manufacturer keys it into their system.  The product ships and a hard copy of the invoice is sent to the distributor who must key in some more information,  then the manufacturer sends out a printed copy of the invoices to their agents.  The agents then key in the sales again.  

That’s an awful lot of repetitive keystrokes folks.  

​It’s pretty easy to see why moving to electronic databases and communication is happening and is going to move to a standard.

Details Details
But there is ONE error in the picture. Can you see what it is?  To be honest, you would probably not even catch the error.  Take a look at the FORMULA in the highlighted cell.  It’s a formula and not text.  The pricing columns all have dollar signs in them.  That’s a nice thing to do if people are going to read it but the computer has to import it.

There have been cases where distributors said “Wow this is a great file and ready to import!”  but then the import went south with strange errors.  It wasn’t the dollar signs,  it was the rounding.  There was multiple column pricing for quantity breaks.  

Everything was a formula and when it was converted to text it had numbers that where out 6 decimal places. Because the formula’s where all based upon one cell as a baseline, the rounding errors got bigger and bigger and when the import happened the pricing was up to .27 cents off on certain items.  That can add up if they standard package quanity is 144 pieces. Why did it happen? Because when the import was done it only imported the first two decimal places.

Once you’ve completed your spreadsheet save all of the fields as TEXT and this problem will go away.

Details Details and more Details
Some other things to consider: What software system do your distributors use to run THEIR BUSINESS?  It’s a good idea to ask.  You may have field length issues when importing.  

​If you have a Description 1 field that is 100 characters long but the field in the software only permits 43 characters, with the rest being parsed, that information IS NOT going to be in the database.  If you have one critical dimension at the end of the description and upon import an entire group of items is parsed all of the part numbers will be different but the descriptions will all be the same.

“Well, we can’t make 100’s of special prices list for EVERY distributor” you say.  You don’t have to.  Just find out what the software is at your key distributors and accommodate them.

“Again, no one has really complained about this before so we don’t think it’s a big issue”

When do you update price lists? When you introduce a new product or have a price increase. Right?

Now, what does a good outside sales force do when there is a change?  They have a sales meeting with the distributors to review the new products (and new catalog) and get the distributor salespeople pumped up to go out and sell.  In many cases this is happening as soon as the new price list is put out… in some cases your sales force is brining it with them.

Is the IT person in the room for the meeting?  Generally the answer is no.  Does your outside sales force commonly work with the IT people at a distributor?  Do they even know who does it if you ask them?  Generally, the answer is no.  When the IT person gets the file, if they discover it’s going to take some time to clean up it gets put on the backburner, especially if their primary responsibility is accounting or other back office work.
​
So what happens in the field? Your salespeople go out, make calls with the distributor salespeople and get some orders.  They place the orders.  The price list isn’t updated so they spend the next couple of days fielding questions, dealing with distributor inside salespeople and your customer service people.  They aren’t selling.  You’re losing money and you’re getting a “difficult” to deal with reputation.