Order Fulfillment Dilemna – When Green Means Gray

Order fulfillment agreements between distributors have been around for years. Have you faced these issues?

• Servicing your customer’s total needs – Distributors are faced with order fulfillment issues when they don’t stock lines that their customer specifically request by brand, or for SKUs that they don’t carry but the customer needs “now”.
• Access to product – Some manufacturers want to restrict their stocking distributor from selling to a competing distributor.
• Production Overruns & Returned Inventory – Manufacturers are also faced with product over production or heavy returns when the market slows.

And have you used some of these solutions?

• Some manufacturers will discount and sell their product in the market to “gray market” ‘distributors’ (or to others where they know the product will end up on the gray market).
• Gray market distributors are used to fill orders for non stocking distributors.

So who contributes more to the Gray market problems, the distributor or the manufacturer? Why buy from this market (access?, price? relationship?, convenience?) Should both parties be supporting the gray market? If not, what is needed to reduce / eliminate it?

And yes, we do know distributors who’s major lamp line is a gray market company and some that don’t purchase from any of the big 3 lamp companies!