Building Successful Manufacturer-to- Distributor Relationships All too often, manufacturers and distributors have tense relationships with many communication problems. When these relationships deteriorate too much, the two companies often split, but not before damage is dealt to both sides in profitability. In fact, profitability is often the number one reason for the problems in the first place. Either one or both of the companies is looking to make profit quickly at the expense of the other one. Another common reason for these problems is miscommunication of expectations on either or both sides. It is very important that both sides detail very clearly what they expect the other company to do and what they believe that they are promising to do. This will help minimize the number of miscommunication problems that occur. For example, a manufacturer may decide to start servicing another distributor as well.
But I Thought You Saidâ€Ś However, if the manufacturer does not have a sales team that is effective at communicating with all parties, pieces of information could get mixed up which would cause confusion and perhaps future miscommunication as well. Another thing that may happen is that the distributor expects to be able to add different and new products to the order in the future, but when the contract is made, the company does not clearly communicate this to the manufacturer. As both the manufacturer and the distributor are solely interested in the profitability of their own company, they are not willing to put forth the investment in the other company to make it truly successful when miscommunication occurs. Sometimes a manufacturer may only be interested in building its name by servicing many different distributers. However, this company may miscalculate how many companies they can really serve and they may over commit themselves so that they do not provide quality service to all of the distributors. The distributors will be left wondering what happened and they will take their business elsewhere. At the same time, one distributor may work with a variety of manufacturers. Miscommunication can also happen here as this company struggles to communicate with some many other companies on a regular basis.
Due to all of the problems between these two types of companies, one may wonder why they even work together at all. However, the relationship can be quite beneficial to both sides when they both work hard to communicate clearly. Still, it is important to know when making this relationship is worthwhile. For a contract manufacturing company, if they can build their own sales team, they should simply sell the product themselves. This will be more profitable in the long run even though working through a distributor may be cheaper in the short run. In addition, you should make sure that your product can effective be sold by the distributor before you chance a firm contract with the company.
If You Canâ€™t Beat â€˜Em, Have Them Work For You On the more positive side, distributors generally specialize in building a strong sales team and in marketing. They can usually sell products quite well to many customers as long as they have a selection of products that are relatively simple in nature. However, as you contemplate building this relationship, you will want to make sure that you are willing to work with the price. Price is very important to distributors and they will work hard to bargain the price as low as possible. The most common complaints that producers have with the sellers is that they do not sell enough and that they sell the item at prices that are too low. These things may both be true, but there are many complaints about the other side as well. These complaints can be minimized when the two sides work together with a high level of understanding and if both sides strive to eliminate miscommunication. Both sides also need to be careful not to stretch their resources too thin so that they can provide quality services as well. As both sides contemplate forming a relationship, they will want to make sure that they choose specialists. When partnered with a specialist you can depend on them to provide quality work and to do their best. In addition, it is important to carefully lay out what you expect of each other. Make sure that both sides understand what is expected. It is also important to understand that the relationship will require effort on both sides. The producer can help with marketing and the distributor can be patient if an order falls behind due to unforeseen circumstances. These relationships can be quite successful when both sides are a little less self concerned. By working together, a new level of success can be achieved.
It is imperative in business relationships that communication exist between partners. If communication is lacking you are in danger of havin...