Who Should Be Carrying Product … Reps or Distributors?

The role of a distributor is to inventory product. If a distributor does not do that, how do they add value? In my opinion, the role of the rep is to assist in the creation of demand for the distributors’ inventory and services. A stocking rep simply waters down the value that a distributor adds to the marketplace.

As a small distributor in OH, stocking reps are great. I don’t have to commit to any inventory adn I get the same price as other independents and the chains and I still get my Imark rebate. These reps keep me in business and the manufacturer pays to hold my inventory.

I have long believed that Rep warehouses keep many undercapitalized distributors in business. The manufacturer should ship everything (i.e., do not allow distributors to pick up ANYTHING). This way, where the product is located would then make no difference. The better distributors will stock for themselves while the smaller distributors may just go away. Nothing wrong with the manufacturer using a Rep warehouse as ashipping point, just don’t allow pickups. And then there’s the issue of products that are “buy & resell” by a Rep. This is just sleaze, in my opinion.

The electrical distribution industry, and electrical distributors, would benefit greatly if there were no stocking reps in the U.S. We’d have to do what we’re all supposed to do. Distributors would have to stock inventory and reps woudl have to sell product and generate demand. The channel would benefit. Manufacturers shouldn’t pay reps additional commission for this disservice.

A national distributor

“Distributors” who don’t stock are not distributors they are brokers and should not be on the books of manufacturers who have local stocking distributors. Period. It is a low form of commercial betrayal when manufacturers set up local inventories to help brokers undermine the margins of legitimate stocking distributors.

I felt this way as a small distributor when we had 5 employees and feel the same way with over 500. Manufacturers and reps who support local inventories do not get my support and I work to make their decision look worse with every passing day. Distributors have helped create the problem by failing to withdraw support reps and manufacturers with local inventories.

Distributors need to find ways to add value or they will become unnecessary.

Selling / marketing products, inventory and carrying accounts receivable are all value adding functions distributors can provide.

Over time, manufacturers have added more distributors to maintain / grow market share. Now, virtually everyone has access to the same products, same cost and margins shrink.

Manufacturers would prefer to have fewer, larger distributor “partners”, but their local warehouses encourage an environment where there is little distributor incentive to inventory or actively promote products that can be purchased from any competitor with a van.

The cost of the local warehouse eventually gets passed along to the distributor.

Manufacturers getting little distributor support will soon target selling direct. Eliminating the distributor markup makes them more competitive and provides more profit to market their products.

Our marketplace (Chicago) has numerous stocking Reps and the large distributors are just as dependent on will calls as the little guys.

If distributors don’t create value for the customer or manufacturer, they’re not needed.

Your comments are only true if based on the premise that the rep warehouse has no policies in place regarding utilization of that warehouse. There are rep firms out there that have strict guidelines in place, some set by the manufacturer, and some set by the rep firm. One wire manufacturer that utilizes a number of select rep warehouses has a policy: only distributors who place monthly stock orders on the factory for shipment are granted access to the local rep inventory. One rep firm has a process where they update a list of their stocking distributers by manufacturer, and they only grant access to the inventory based on the “stocking criteria”. In both these examples, the rep has policies that protect the distributor from non-stocking distributors, as well as provide an increased level of service to the distributor on an order that might have been lost if it had to ship from a factory across the country. A fair and balanced perspective of this issue would have included these facts in the analysis.

A major role of a distributor is to carry inventory to support their customers’ needs. This can be at a location or through a distributor-owned redistribution system.The electrical distribution industry, and electrical distributors, would benefit greatly if there were no stocking reps in the U.S.The role of a distributor is to inventory product.One rep firm has a process where they update a list of their stocking distributors by manufacturer, and they only grant access to the inventory based on the “stocking criteria”. In both these examples, the rep has policies that protect the distributor from non-stocking distributors, as well as provide an increased level of service to the distributor on an order that might have been lost if it had to ship from a factory across the country.