“How Your Local Distributor is Still Winning” featured on American Fastener Journal

Combining In-Plant Logistics with Consultative Communication allows local distributors to thrive both today and in the future.

The value of the distributor has been understood for quite some time. They have a sales force, local delivery, and stock inventory. They are a one-stop shop; an easy place for manufacturers who would have been overwhelmed if they had to find an OEM source for every item that came up for purchase.

Over the past several years, however, disruption that had already arrived for many other sectors of the economy started making a real impact to fastener distributors. Corporate conglomerations bought their way into the business and scaled quickly to maximize their profits. In addition, a mature internet allowed suppliers to quote well outside of their geographic reach and use 3PL’s for their logistics. The resulting landscape has meant even more hustling for local and regional distributors to maintain their customers in the face of new market pressures. To remain successful, there are two major ways that your friendly, neighborhood distributor is still managing to stay ahead of the competition and provide real value for their customers.

In-Plant Logistics

If a manufacturer only needs to get parts to their door with no value added services, then chances are they’re buying online or negotiating a corporate contract. However, if they need help inside the door with value added services, that’s where service oriented distributors shine. As lean principles have come close to full saturation in U.S. manufacturing, the focus on driving efficiencies have sent management teams to every corner of their plants to reduce overhead and cut spending. This has pushed work back up the supply chain into the arms of local distributors willing to work. Here are a few of the services to meet market demands:

VENDOR MANAGED INVENTORY: With less personnel on the floor, manufacturers want every person in their organization focused on their value stream. Vendor Managed Inventory (VMI) allows just that. The distributor handles the full order cycle: ordering, delivering parts to the line, taking inventory, and handling changes in usage. When done correctly, VMI brings a variety of benefits to customers, from financial advantages such as lower shipping cost, lower on-hand inventory, and better pricing, to the operational advantages of labor allocation, increased accuracy, and higher fill rate.

KITTING / SUB-ASSEMBLY: Manufacturers, with an even tighter focus on what truly adds value to their end products work with their local distributor, create specialized SKUs just for them. So instead of ordering a bolt, nut, washer, and flange, they order one “part” for their line which is pre-kitted by the distributor, allowing the line to work faster. Or, to speed things up even more, sub-assembly is done with their fastener components so that it’s plug and play as parts move down the line.

INTEGRATED SUPPLY For larger manufacturers who want the full array of distributor services and want to exit the supply side completely, Integrated Supply offers the greatest synergy. In Integrated Supply, the distributor has personnel on-site providing 24/7 operational support. Integrated Supply is an in-depth, long-term relationship, and the distributor customizes a fully array of services such as VMI, Kitting, Vending, Consignment, and MRO management. Integrated maximizes value for both the distributor and manufacturer, as full integration can result in best in class operations at the lowest total cost.

Consultative Communication

As important as the logistical and operational side is, the true differentiator still comes back to people. When you look behind the website, the programs, the technology, and the services, real value is still being driven by people. Winning local distributors understand this, and enable their people to be successful. But to be effective, they have to possess these key traits:

EFFECTIVE COMMUNICATOR: Clichés exist for a reason, and effective communication between customer and supplier is crucial to success. Anyone can set up systems to talk to each other to update forecasts, but where local distributors excel is in the person-to-person interaction. Having someone who can internalize what they learn from the customer’s procurement, supply chain, manufacturing, and sales teams and then use it to augment a forecast or modify an order will smooth out mistakes before they occur.

APPLIED INGENUITY: A spark of creativity can solve the problems that inevitably arise in a manufacturing environment. Each day has the potential to bring a new situation that can’t be solved by the book, so utilizing ingenuity to overcome challenges can prevent disruption to operations or bring about the next cost savings opportunity.

BUSINESS ADVISERS: Winning distributors view themselves as analysts and advisers for their customer’s business. By taking a consultative approach, they are working to share knowledge, resources, and tools to make the customer run as well as possible. Focusing on how to improve the customer’s business allows local distributors to continue to earn trust that will pay long-term dividends.

This article was originally featured in the September/October 2018 issue of American Fastener Journal.