Last week we interviewed a number of distributors in preparation for an operationally-oriented article we are writing based upon feedback we received in our Channel Challenges survey. The article will focus on at least three operational issues – data synchronization, pricing processes and inventory management. The phone interviews were enlightening, but sometimes you can’t get everything into an article. The following quote, from the owner of a $100-200M distributor with multiple locations, was interesting, and possibly representative of others:
“Despite all the high drama from NAED vs. IDEA last year, we have been concerned about the amount of internal work that centers around our pricing errors and the amount of claims we “think” we haven’t claimed and the surprises we find in our warehouses occasionally. It seems like we have at least one and maybe two reps in each week dealing with monetary claims (SPAs) and pricing issues. And the surprising part is that we are receiving net pricing from a number of manufacturers. Now we are an 8 branch distributor and you would think that we eventually would work through pricing issues on stock items.
We tried to bring in some IDEA data for two lines. We noticed some ‘minor problems’ with the data. Every field for GE Industrial had the same price in it. Some of the fields on the other line were not populated. All of a sudden I had IT people asking for overtime. I was told it was the new data that required their time…..plus they were busy installing files from reps and manufacturers. My IT people time went from 2 people @ 40 hours to 2 people at 50 hours and we still have reps come in to help us straighten out special prices and claims. The frustrating part is that we’ve used Trade Service Corp’s data since we started this business and didn’t have data problems. We made a lot of money using their data, and IT operated smoothly.
On top of this our wireless warehouse was set up we using codes from Trade Service. It works so long as we don’t monkey with the data in the computer. It would help if the manufacturers used the same codes we do. We’ll probably have to change this system if we move over to IDEA data.
Too sum it up, reps probably feel like a sheet on a clothes line in a high breeze. They get whipped into cleaning up manufacturer generated problems from IDEA and from the manufacturers files that they send to us. It’s like one giant manufacturer conspiracy to us …. confusing pricing, slow pay back on claims and pump as much inventory onto our shelves as possible (and by the way most it they don’t want back), some dated terms, some promotions that don’t have a chance of succeeding (there are those that do work) and then a social club (NAED) that thinks they know a thing or two about how to make money running a distributorship business wants to tell everyone how to run their business. As I recall some of these big distributors have been caught fixing prices and rigging contracts a time or two.”
We thought this was an interesting perspective. Your thoughts?
10 Comments
One central data warehouse would be good if it could be populated correctly.
Our company does not think IDEA offers enough coverage. They do offer cheap VAN cost.
Our business is built and runs on Trade Service data. It is very easy too use. Unfortunately a few strong supporters of NAED may have got us into the same mess that they professed with Trade many years ago.
Now we have a Software company(with a big share of distributors) actually running the VAN service and looking at all our business.
Baltimore Distributor
There are some good points here. IDEA is a good idea executed poorly. The level of commitment from both suppliers and distriburors has been lukewarm at best, and no one has figured out how to provide the economic incebtives that would raise the level of enthusiasm and support from both constituants.
NAED has made some progress in adding value to its members, but as the recent self congratulatory blow out in San Francisco illustrates, has a long way to go before they “get it”. NAED is a club, run by members with a deficit of vision and no real sense of how to positively change the industry. Like the environment in Washington, the political nature of NAED produces a toxic environment for industry enhancing innovation. To really become relavent, NAED needs to change its “good old boy” board structure, revise its economics (they depend too much on revenue from the partys they throw (aka meetings))and their egocentric focus on the chairperson.
Well put by the last person about NAED. Don’t know about IDEA.
Some people get caught up in this party deal that NAED seems to like.
Their vision statement should probably be “less value, more party”.
___________________________
Right now the concern is about making money. Operational issues are a concern. We’d like the bare bone “net” price with out all the other claim backs.
To the person whose quote you use…Thanks. We have similiar issues and we really don’t want to reinvent the wheel when it comes to what works for us.
Bill in Salt Lake City
The lack of coverage is one issue with IDEA. The lack of ease in using the data is another issue. But now IDEA is touting that “we can offer you data in any format” to fit your business software.
Didn’t Trade Service protect their format in a Federal Court?
John R in the Greater Chicago area
We actually have some manufacturers that work with us. Good companies!
We’ve heard the ‘pitch’ about the “secret hand shake” to get TS data from Idea. Frankly we are suspect of it and don’t want the problems with operations and potential legal issues.
J. H. in MO
Very interesting viewpoint.We have similiar issues.
We’ve got all the coverage we want right now from Trade data.
J.B. Hudson-Arkansas
IDEA is a neat idea…but there are major issues of coverage and completeness of data.
We find that the manufacturer may have placed their data there once….and do not update it.
We are headed back to Trade data. We have products to sell.
Bill in Houston,TX
10 years of people dumping money and time into IDEA…..and this as far as they can get. Good VAN service.
We are not going to bark up the IDEA data tree. No coverage to speak of and we seem to be doing allright. This claim crap is a drag on the industry as a whole.
Doing fine in WI/IA
Are the lights being turned out at IDEA? Based on the two press releases we received late yesterday IDEA and TSC are going their seperate ways. This good because YTSC has been proping up IDEA for years.
This started with what Tom Naber did earlier last year with running off Mike Rioux.Tom seems to have a series of really bad personal problems. Yet we continue to protect him. This is crazy.
I would bet good money that Gaylord (who by the way is pretty good guy) will not be at IDEA must longer.
Sure reads like the lights are being turned out at IDEA.
Fortunately we bet that TSC would eventually prevail and that they have stayed above the fray with all the problems with NAED leadership with M.Rioux and now they are at the throat of Gaylord.
Thanks to Tonm he may have caused the train wreck.
B.S. in Pittsburg, PA
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