EDITORIAL

Doing so much for so little

Making money as a wholesaler has never been easy. But today's market has challenged the profitability of wholesaling as never before.

Wholesalers have seldom, if ever, been asked to do so much for so many for so little. As their customers' service needs and demands have increased, profit margins have decreased. The squeeze is on... Big Time.

A major problem is that retailer, builder and commercial accounts want their traditional level of service coupled with the absolute lowest price. When wholesalers try to explain that this is impossible, buyers turn off; they just don't want to hear it. Many go elsewhere, cherry picking deals, seeking the unreachable dream.

Deliveries are a particular problem. Not only is there more piece pulling, but the entire exercise is more labor intensive. Loading isn't the end of it. In the old days; the truck would stop by every Tuesday morning. Now, the customer cry is that they must have it by 9:00 a.m. tomorrow. Or else.

Scrambling to keep customers happy, wholesalers by necessity run trucks out loaded way below capacity, adding to the overhead burden and further aggravating the situation.

As retailen carry fewer of each sku, the inventory function has been pushed up the chain of distribution to wholesalers and even to manufacturers. But with customers demanding just-in-time deliveries, suppliers are under extreme pressure to perform and make a reasonable profit.

Increasingly, suppliers realize that mere distribution isn't enough. Value-added functions must be performed all along the way to help customers, and equally important, to allow wholesalers the essential profit needed to survive.

Savvy retailers know they need to be partners with their suppliers. If dealers play one wholesaler offagainst another long enough, they end up with fewer wholesalers, the possibility of higher prices and few winners. Each needs the other. Today, more than ever.

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