Issue link: https://www.e-digitaleditions.com/i/964617
4 FEDA News & Views at was the original intent behind the fi rst demand-win program created in the 1970s—to encourage and incentivize distributors for investing in costly value-adds like fi eld application engineers (FAEs). But slimmer margins, precipitated by the popularity of ecommerce and, of course, the rise of Amazon, have led to pockets of friction. Manufacturers say that distributors need to provide more value on the sales side; distributors believe that they are not compensated for the value they provide. e industry is at a crossroads. Distribution expert Mike Workman has seen the replay, and calls the trend a great time to be in business. Distributors that can diff erentiate their value have an opportunity to redefi ne the channel, thinks Workman. He and distributor Future Electronics are of the same mindset. Swatting down assertions that manufacturer- distributor relationships were tenuous, Future's corporate vice president said, "Our relationships are deeper than they've ever been with our manufacturers because the manufacturers we do business with see value." As noted in our cover story, Alto-Shaam President Steve Maahs sees the value in e Boelter Companies' upscale superstore model, calling it what manufacturers want from their partners. "We need to show our products in use, show what they can do for an operator, let the operator kick the tires for themselves," says Maahs, citing Boelter's Milwaukee, Chicago and Atlanta superstores as examples of demand creation. Greater market penetration and preference, that's what Maahs calls demand creation and it's what he and other suppliers truly covet, according to several I spoke with off the record. How do they defi ne value in the distribution community? " e most important value to me," said one, "is does the distributor control what they sell? Do they bring the product to market? Do they create the sell?" ere also was plenty of talk about harkening back to the days of limited distribution— "When, if you were a Garland distributor, you couldn't buy Vulcan or U.S. Range." e hard part is making it work in a buying group culture, many admitted, and there's also the challenge of competing in a climate where customers are demanding more options. NAW Fellow Mark Dancer off ers an example in "Out of the Box." Denver-based specialty chemicals distributor Krayden has built its value proposition around serving a select group of manufacturers, a practice that Dancer says has helped the distributor to provide customers—and suppliers—more customized solutions. "In this age of rapid change, the question that everyone should be asking is who is going to add the tangible, diff erentiated value to the customer," says Industry Insights columnist Dirk Beveridge. "Some want to hold on to legacy, some want to hold on to past loyalty, some want to hang on to hope. e one thing we know is that the way business is going to be done will be remarkably diff erent." emed " e Critical Link," this issue highlights E&S distributors that are already asking the tough questions about sustained relevance. Asking the right questions can be more challenging than fi nding the answers, off ers Warren Berger, the author of the book "A More Beautiful Question: e Power of Inquiry to Spark Breakthrough Ideas." e ones that I've heard echoed in various circles all either start or end with Amazon. I would love to hear any thoughts on the response. Email me at stacy@feda.com. ■ Creating Value Trumps Disruption in Any Industry From the Editor T here are a few parallels from the electronics distribution industry that E&S distributors and manufacturers should take note of as both continue to grapple with shifts occurring in our industry. In 2016, Texas Instruments (TI)—a longtime friend of the electronics distributor—signaled an aggressive about-face in its go-to-market strategy when it announced that it was getting rid of its demand creation program. To offset costs, and hold on to margin points traditionally allotted for the distributor, TI has taken over the responsibility of getting its products and designs in the hands of OEMs. Distributors still handle order fulfillment but the supplier carries out the higher-profit function. Like in E&S, many electronics manufacturers still prefer letting distributors shoulder the added expense of supporting their products in the marketplace, acknowledging that their channel partners are better equipped to provide the additional services necessary to take care of the customer. Stacy Ward EDITOR IN CHIEF stacy@feda.com