---
title: "7 Signals from Manufacturers That Spell Trouble for Distributors"
description: "Distributors should be alert to seven warning signs from manufacturers, including the resignation of the marketing director, changes in regional managers, frequent policy changes, delayed expense reimbursements, excessive new product launches, unstable product quality, and increased pressure to stock up. Each signal indicates potential problems that could negatively impact the distributor's business."
author: "New Distribution"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2016-04-16"
language: "en"
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# 7 Signals from Manufacturers That Spell Trouble for Distributors

> Distributors should be alert to seven warning signs from manufacturers, including the resignation of the marketing director, changes in regional managers, frequent policy changes, delayed expense reimbursements, excessive new product launches, unstable product quality, and increased pressure to stock up. Each signal indicates potential problems that could negatively impact the distributor's business.

>>>>
**Resignation of the Marketing Director**
The marketing director determines the direction and methods of market operations. Decisions such as whether to aggressively pursue the hotel channel, whether to support channel partners, how to cooperate with e-commerce platforms, and how to leverage mobile internet are all made by the marketing director. The resignation of the marketing director can significantly impact the implementation of existing marketing policies, as each marketing director has their own approach. During the transition, many policies that distributors are executing will be affected.
**Distributor Advice:** Arrange a face-to-face meeting to understand new developments. Through the regional manager, invite the new marketing director to visit the distributor's market for research and guidance. This serves to build rapport and understand the company's new marketing principles and direction.
>>>>
**Change of Regional Manager for the Market**
As the saying goes, "A new emperor brings new ministers." For distributors, it can be said that "each regional manager brings a different business environment." For companies, especially national brands and strong regional brands, the regional manager's importance to external markets can even exceed that of the marketing director. Why? Because the regional manager directly controls the reimbursement of distributor expenses. Once the regional manager leaves, they will no longer care about the reimbursement issues of that distributor.
This is related to how companies evaluate regional managers. The performance of regional managers is directly linked to the amount of money distributors pay. Therefore, a regional manager who has already earned their performance bonus and is being transferred away from that market will not be willing to pay out money they have already pocketed. The new regional manager often will not take over the outstanding expense issues either, as it is clearly a thankless task.
**Distributor Advice:** Contact in advance and act promptly to avoid turning unclear accounts into bad debts. Distributors should maintain close communication with the regional manager, especially regarding any changes in their position. Once you learn of a change in regional manager, immediately go to the manufacturer and meet with the marketing director and the former regional manager to clarify any unreimbursed expenses and related policies. Never leave an unclear account, as it often turns into a bad debt that no one will take responsibility for.
>>>>
**Frequent Changes in Market Policies**
Frequent changes in manufacturer market policies put distributors in a very passive position. Each policy change requires the distributor's sales team to explain to sub-distributors, leading to complaints and damaging the distributor's customer relationships. It is frustrating for distributors to see years of accumulated goodwill harmed by manufacturer policy changes.
**Distributor Advice:** Take the regional manager to the market to analyze and evaluate the right direction. The wisest move is to bring the manufacturer's regional manager along to visit customers, letting them hear the complaints of sub-distributors and see firsthand the obstacles that policy changes create for the distributor's sales efforts. If the regional manager is truly a market-oriented leader, they will take action. At the same time, distributors should carefully analyze and evaluate the manufacturer's policies and flexibly choose policies that satisfy the interests of sub-distributors.
>>>>
**Delayed Expense Reimbursement**
Do not underestimate the problem of slow expense reimbursement. If the manufacturer is not timely in reimbursing distributor expenses, it is either a matter of efficiency or cash flow. Either reason indicates that the company's operations are facing issues, and these will have a significant impact on the distributor's business. Many distributors have suffered from "low efficiency" of manufacturers: waiting half a year for a packaging change; applying for promotional policies only to have them approved after the holiday has passed; wanting to add a new product, but by the time it is produced, competitors have already sold like crazy... If the manufacturer is facing cash flow problems and delays payments, most manufacturers will only push inventory without reimbursing, eventually leading to cash flow problems for the distributor as well.
**Distributor Advice:** Communicate more with senior management and control inventory reasonably. On one hand, seek more opportunities to communicate with senior leaders, using professional advice and innovative methods to attract their attention. Attention from senior leaders will improve the efficiency of matters involving the company. On the other hand, distributors should keep inventory and outstanding debts within reasonable limits to ensure smooth cash flow, even if it means sacrificing some rebates and rewards.
>>>>
**Continuous Launch of New Products**
Manufacturers launch new products generally for three purposes: **First, to increase sales volume; second, to supplement the product line; third, to expand the distributor network.** The first two are fine, but the purpose of expanding the distributor network causes unease among existing distributors. After all, the resources a company invests in a market are limited. When new products arrive, they will compete for the existing distributor's market expenses and market share. Launching new products at the right time and in the right quantity can activate the market; otherwise, it can have the opposite effect.
**What is the right time?** When a brand has 1-2 leading products in a market and holds more than 30% of the market share in the mainstream price band, it is appropriate to upgrade or extend the product line.
**What is the right quantity?** The company's overall marketing budget should support the smooth sale of leading products and "nurture" a few new products. Only launch as many new products as can be supported.
**Distributor Advice:** Don't panic when new products arrive; look at the "characteristics" before deciding. For new products launched by the company, consider taking them on if they have the following characteristics: First, they are upgrades or extensions of old, aging products; Second, they are strategic new products for the company; Third, they are recognized by sub-distributors.
Do not take on products with the following characteristics: First, products that were previously launched but withdrawn from the market; re-launching such products may have leftover market issues; Second, products that overlap in price with existing products.
>>>>
**Unstable Product Quality**
Well-known national companies and strong regional brands generally do not have this problem, but local companies often do. Quality and taste are the foundation of a product's position in the market. If there are voices in the market about "unstable quality," then the company is in big trouble!
**Distributor Advice:** Pay attention to quality changes and provide timely feedback to the manufacturer. Monitor the evaluations of product quality from sub-distributors and consumers. Once "negative evaluations" appear, collect them and report to the manufacturer's leadership. If the manufacturer takes it seriously, there is still a possibility of cooperation. If the manufacturer does not care, there is no need to continue cooperation.
>>>>
**Increased Frequency of Inventory Pressure**
Companies that urge distributors to pay every month are either striving to gain market share or "financing" from distributors to obtain funds for market operations. If it is the latter, using inventory pressure to obtain operating funds will lead distributors into a vicious cycle: "the less sales, the less investment; the less investment, the less sales."
**Distributor Advice:** Be wary of high-frequency inventory pressure and control the pace of payments and purchases. Distributors should pay enough attention to the increasing frequency of inventory pressure and avoid using their hard-earned money to fill a warehouse with inventory. Control the pace of payments and purchases, even if it means giving up some rebates and rewards, to keep inventory within reasonable limits and ensure smooth capital turnover.

Source: Food Industry Expert

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