Do Wholesale Distributors Still Fear Disintermediation?
By Phil Perkins
President and CEO, ACUMEN Corporation
In 2002 I had the opportunity to address a group of wholesale distribution business owners at a conference in Milwaukee. The subject of my talk was the move by many manufacturers to offer their products directly to buyers via “company stores” or web sites. That is roughly the meaning of the daunting term “disintermediation”, the process of eliminating the middleman. Clearly these business people were concerned, almost fearful. But as we discussed in an informal session after my presentation, these savvy folks knew that their survival depended upon delivering stellar service along with products.
Clearly these business people were concerned, almost fearful. But as we discussed in an informal session after my presentation, these savvy folks knew that their survival depended upon delivering stellar service along with products.
I’m often quoted as saying “the delivery system is of equal or greater importance than the product being delivered”. I feel certain the candid dialogue with those pros that day was the genesis of that phrase even though I now apply it to my business.
You might think that manufacturers would have learned their lesson as the distributors fought hard and won the battle to retain their customers by maintaining very high service levels. But the battle continues on many fronts. And, to answer the question, yes distributors are still very much on guard.
Just this morning I read that Tesla wants to position another “company store” here in Virginia, a move that is not permissible under current law. Of course the auto dealers (not technically wholesalers I realize) are actively contesting the move. But like my friends in Milwaukee, car dealers build business year after year by adding outstanding service to the delivery and maintenance of great cars. That’s one reason I’ve bought 8 cars from the same dealer over the years … service.
There are many ways wholesalers can maintain high service levels, of course. Perhaps most important is insuring that they have the inventory available to fill orders when and where needed. Inventory optimization is discussed every day in many forums. We will be addressing this very issue during a web session on April 19, 2016. You can register here.