Friday, November 2, 2012

How do you handle a situation in which distributors complain about suppliers selling direct yet they, themselves, source product directly from overseas?

The premise of the Industry is founded on a Supplier and Distributor relationship.  The integrity of the Supplier and Distributor relationship is the strength of the industry.  The primary tenant that no one will disagree is that the Supplier does not sell product directly to end buyer organizations, as this is the job of the sales organization or Distributor Company.  Suppliers that sell to end buyer organizations are looked upon as less favorable than those who do not sell direct.  From the Supplier’s perspective their does seem to be a double standard because Distributors have many direct factory relationships to overcome price pressure from customers.  

With a hobbling global economy Distributors are economically pressured to skip the U.S. import supplier and deal directly with factory in China.  Consequently, direct import trading companies have started to register with the industry organization making it easier for Distributors to connect directly with factory representatives that work on commission and can eliminate all need for a U.S. supplier.  Some of the larger distributor companies have but their own purchasing policies in place that make all orders over a certain dollar value go out for bid to other suppliers.  Many of these suppliers are non-industry suppliers, trading companies, or directly with the premier factories.

In my experience it provides no value for the Supplier to complain about the Distributor's sourcing practice, as well as it does no good for the Distributor to complain about the Supplier's direct sales practice.   While Artistic Toy does not sell directly to end user buyers, the focus must be on how we can help each other regardless of who you sell to or buy from.  No one distributor or supplier owns any customer relationship.  Every buyer has a different set of needs and requirements for ordering and you have to carefully understand how each of us fits into that relationship.  The real problem for most businesses is who my target market and what am I better at than anyone in the world?  Once we answer those questions with clarity and integrity our value is sustained regardless of supply chain problems.    

No comments: