Optimizing the Manufacturer and Distributor Relationship with Data
Emerging technologies, industry trends, and the changing customer landscape are all factors that affect the channel, both on the Manufacturer and Distributor side. Channel collaboration becomes a key competitive advantage when traditional Manufacturer and Distributor value propositions are under pressure.
With so much change, a channel strategy that tightens the relationship between Manufacturers and Distributors will arguably drive efficiencies, cost savings, and revenue growth. So how can channel stakeholders find common ground on which to build a strong, mutually successful partnership?
At Precision, we believe Data is that common ground; the key to optimizing the Manufacturer and Distributor relationship.
Paving the road for collaboration
Channel collaboration is not a new concept, but the urgency to achieve it has risen. In fact, the urgency to transform a historically transactional relationship between manufacturers vs distributors into one of alignment & partnership has never been higher.
We have always known the relationship between Manufacturers and Distributors to be symbiotic – one does not exist without the other. And although this seems like a simple concept, it turns complex when Manufacturers and Distributors are focused on their own internal objectives & goals.
With investments of time and resources at such a premium, collaboration towards a common goal is essential to growth in the current landscape.
Engaging with peers
Collaboration begins with communication. Engaging with industry peers encourages new ways of thinking and working. It can create new opportunities for Manufacturers and Distributors to work together. Channel leaders like ISA, the channel association for the Industrial MROP industry, are at the forefront of this. They acknowledge that traditional supply channels and supporting sales models are no longer keeping up with the changing times.
Through purposeful networking and thought-provoking discussions, we can drill down on issues together and create a new channel that’s built for the future.”
ISA strives to “help stakeholders (Distributors, Manufacturers, and IMRs) create better value for each other while attaining the goal of satisfying the End User’s evolving needs.”
Leaders can engage with peers at their ISA22 convention where topics like supply chain issues, labor shortages, evolving end user, and mergers and acquisitions (M&A) strive to bring channel stakeholders together to find mutually beneficial solutions to these issues.
Using available data
Modern technologies, digital transformation, and data insights are also helping to pave the road for improved collaboration between Manufacturers and Distributors. These new technologies and digitization efforts have increased the availability of data . . . lots of data. And because data lacks emotion and ambiguity, it can be used to raise the trust factor amongst potential collaborators.
Data has the power to transform into fact-based insights and business intelligence when mined and analyzed – leverage this data to drive strategy toward mutual growth. Data also offers a layer of transparency that Manufacturers and Distributors can benefit from to grow their respective businesses and improve their relationships with each other.
Companies often have security and trust concerns that prevent the sharing of data or lack time or resources to leverage their available data. In these cases, a trusted third-party data partner can keep the data secure and anonymous, while producing fact-based insights that be used to accomplish mutual goals.
Leveraging data for optimal decision-making
Assuming the desire for collaboration and a data-driven strategy, the question then becomes how exactly to leverage the data to optimize the Manufacturer and Distributor relationship.
Data may not solve all the challenges between Distributors and Manufacturers, but as Albert Einstein once said, “in the middle of difficulty lies opportunity.”
When the potential for partnership is recognized, the opportunity for closer collaboration and mutual growth increases.
Here area few examples of potential ways to partner using data:
Category Management
With data from both the Manufacturer and Distributor, companies can identify mutual business opportunities to collaborate on category objectives, alleviate supply chain bottlenecks, and accelerate growth. Transactional data can be compiled, statistically modeled, and leveraged to optimize category assortment, segment product by buying behaviors and market basket, and measure share of category. Distributors can then use these insights, strategies, and action plans to drive category growth through their key Manufacturers.
Point-of-Sale (POS) Insights
Distributor Point-of-Sale (POS) data is valuable and data security is paramount. Utilizing a third-party to securely share key insights from that data with key Manufacturer partners provides an opportunity to drive volume and profitable category growth for the Distributor and helps drive the Manufacturer’s decisions on investment and allocation of resources. Insights gleaned from POS data can provide a playbook of engagement between the Manufacturer and Distributor.
End-User Planning and Targeting
Customer segmentation analysis utilizing sales data can help predict customer churn and loyalty, identify gaps and opportunities, and aid in developing tailored customer business plans. Insights gathered from Manufacturer sales data and Distributor transactional data can help execute on those customer business plans. Market Basket Analysis, Cross-Category Correlation, and identifying white space and underpenetrated categories can bring a laser focus to Manufacturer and Distributor sales teams to partner on targeting key end users for selling opportunities.
Many leading-edge companies have already recognized the tremendous value that closer Manufacturer-Distributor collaboration can yield. Leveraging data and advanced analytics will enable positive collaboration and drive meaningful revenue and profit improvement for both the Manufacturer and Distributor.
To learn more about optimizing the manufacturer and distributor relationship with data, attend the ISA Virtual Panel session on Tuesday April 19, 2022. Register for the upcoming ISA22 event with a virtual pass here.
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