Issue link: https://www.e-digitaleditions.com/i/999236
54 FEDA News & Views channel today. e 1998 DREF report: Facing the Forces of Change found that 25 percent of the costs in the channel are redundant. If customers could eliminate this redundancy, they could possibly achieve a lower price. Of course, in doing so, the customer may lose the value provided by distribution, but most customers do not know what that is worth. ey do know how much they will save if they fi nd how out reduce these costs and receive a lower price. erein lies the problem. Customers will fi nd a way to reduce their costs. Maybe by using e-commerce, going direct or going to overseas sources. All have their own set of problems and costs, but they also off er the customer cost saving potential. If wholesale distribution, as an industry, does not fi nd the answers on how to reduce these redundant costs and become an even more effi cient supply chain, the customer will. And in such cases, it usually is not to the liking of the distributor or the manufacturer. Good News/ Bad News e good news is that many distributors and manufacturers see the need to work better together to make the distribution channel more effi cient. In fact, "Team Up! Profi t Up!" found that 90 percent of the distributors and 83 percent of the manufacturers saw the need to work better together to reduce costs as either very important or extremely important. e bad Discover what the Wood Stone Gas Plancha can do for you. Visit gasplancha.com to learn more. Changing the Way You Cook since 1990 800.988.8103 360.650.1111 woodstone-corp.com Introducing T H E W O O D S T O N E Powerful Adjustable temperature range from 150°- 650° F. Versatile Get heat when and where you need it. Consistent Same sear from the same spot. Gas Plancha news is that both these channel companies also felt they did not have the time to work on these costs. e result: We try to accomplish improvements on our own that can, in some cases, cause problems for the other company. For example, distributors are trying to off er more products to their customers and improve the profi t ratio on sales per order—but additional lines mean less focus on a specifi c manufacturer's products, sometimes resulting in lost market share. In an attempt to recover this lost market share, the manufacturer then adds on additional distributors, further diluting the distinction the distributor brings to the customer. Or, the distributor reduces inventories to cut costs, but this dilutes the value they provide manufacturing and can drive up the manufacturer's cost to have product available to meet customer demands. In eff ect, the value each channel partner is adding to the other is diluted and the cost savings for one is often a cost to the other. e bottom line is that we need to determine how we can work better together to reduce the costs in the channel for our mutual benefi t. Getting Started Getting started is often the toughest part of any change. Time constraints, other initiatives, concerns over the ability to fi nd a channel partner willing to collaborate, and a host of other reasons all make taking that fi rst step very diffi cult. But with so many distributors and manufacturers knowing they need to work on these issues, somebody will take the fi rst step. And when they do, they have the potential to create a real competitive advantage, a more cost- eff ective and effi cient supply chain. is is exactly what the customer needs, and can make both distributors and suppliers more profi table and competitive. For those companies looking to get started, here are the steps to take: 1. Supply Chain Initiative Evaluation: e fi rst step is for supplier and distributor partners to look at the pressures they are facing on an individual basis. What concerns do they have? Where are the greatest costs they incur? en, determine if there are opportunities to work with channel partners to reduce costs and accomplish goals together. 2. Identify & Approach Key Suppliers: Companies desiring to implement this should not try to do this with every supply partner. Instead, identify one or two companies with whom you are willing to work. e selection should be based on the impact the supplier has on your costs/sales, their willingness to work with you, and a strong existing relationship. 3. Evaluate Options Together: Once you have found a company to work with you, look at their needs and yours. Find opportunities that make sense to both. Finding common ground overcomes a lot of barriers. After some success, companies can tackle harder issues.