Click the image for details Private Enterprise Internal Management Research/Pan Wenfu From the manufacturer's perspective, distributors are often viewed as subordinate units. To put it bluntly, they are seen as sales tools. Based on this premise, manufacturers issue various requirements and directives to distributors, hoping they will listen, cooperate, execute diligently, and ultimately achieve a win-win situation for both parties, progressing hand in hand. But are there such obedient distributors? Most distributors show limited cooperation with manufacturer directives, often敷衍了事, making excuses, delaying repeatedly, or executing poorly, especially in areas such as payment, ordering, inventory reporting, seasonal stockpiling, distribution, terminal construction, promotional execution, market data provision, and utilization of social resources. This lack of cooperation indeed troubles sales managers at all levels. Logically, this is manufacturer-distributor cooperation, but if the distributor doesn't listen, what's the point of cooperating? Objectively speaking, as long as a distributor holds a certain market position locally, non-cooperation with the manufacturer is normal. They are not subordinate units of the manufacturer and have no obligation to obey. Even with a contract, its binding force is limited. After all, in the commercial field, playing the administrative command game won't get you anywhere. Of course, as businessmen, they may clash with upstream companies, but they won't clash with money. Distributor cooperation with manufacturers is either an exchange of interests or the result of strategic guidance from the manufacturer. This strategic guidance is complex to discuss, so let's first talk about the interest exchange. When it comes to interests, manufacturers might emphasize the profit margins they've left for distributors, various expenses and support, and the market potential. But don't forget, the distributor's profit is not given by the manufacturer; it's earned by the distributor in the local market. In fact, the manufacturer directly profits from the distributor. Moreover, manufacturers often habitually conflate the distributor boss's personal profit with the distributor company's profit, assuming that since the boss owns the company, as long as the boss profits, it's fine. But that's not the case. The boss is the one who buys goods, while employees sell them. Only winning over the buyer without winning over the sellers won't work. Furthermore, the final sale to consumers is made by retailers. In short, sales are not a single point but a combination of various points in the distribution channel. Returning to the topic of distributor cooperation, for manufacturers to improve distributor cooperation, they need to assess and work on three levels.
- The Distributor Boss Level Distributor bosses cooperate with manufacturers mainly for interest exchange, which comprises multiple factors:
- Historical emotional ties from years of cooperation with the upstream manufacturer; emotional benefits are also benefits.
- The product itself contributes to sales volume and profit; manufacturers treat distributors as sales tools, while distributors treat manufacturers' products as money-making tools.
- Specific functions of the product, such as enhancing the distributor company's brand image, expanding channels, driving sales of other products, and completing the overall product mix.
- Value-added services from the manufacturer, which go beyond regular sales, such as helping distributors solve cost control issues, internal management issues, and personnel training issues.
- The Distributor's Employee Level From the manufacturer's perspective, the distributor's employees belong to the distributor company, i.e., the distributor boss, and should follow the boss's orders, with the boss responsible for benefit distribution. The manufacturer need not intervene. However:
- In most private companies, labor-management relations are tense, and employees' compliance with boss's orders is not high.
- Employees' basic qualities, work abilities, execution, and stability are uncertain.
- The high profits given by the manufacturer to the distributor boss have little direct relation to the employees.
- Employees may not dare to confront the boss, but they may vent their emotions on the sales of the manufacturer's products.
- Downstream Customers Even if there are no issues at the distributor level, the distributor cannot represent its downstream customers. The distributor may want to push certain products, but downstream customers may not accept them. Of course, this brings up the issue of distributor management of downstream customers. Just as the distributor is not a subordinate unit of the manufacturer, downstream customers are not subordinate units of the distributor. The distributor has no right to command; it can only rely on interest exchange or strategic guidance. In summary, distributor cooperation with manufacturers is based on at least these three levels. Only when all three levels work together can the channel be effectively organized, optimizing each point, and ultimately achieving the value of moving the manufacturer's products. The problem is that most manufacturers still fail to address two issues: first, they habitually treat distributors as subordinate units, believing that once they issue a directive, distributors should obey and cooperate; second, they think that winning over the distributor boss is enough. In reality, winning over the distributor boss only solves the contract and initial order issues. The author, a private business owner, has managed a family distributor company for many years, during which he also served as business manager and trainer in several production enterprises. His research focuses on internal management of small and medium-sized private enterprises, with main topics including personnel management, cost control, management backend construction, and veterans entering private enterprises. He continuously breaks down over 400 topics related to internal management of private enterprises and keeps updating materials and solutions. Click the image for details The 3rd (CFIC) China FMCG + Internet Conference will be held in Chongqing in October 2017. The conference will closely focus on the theme "New Forces, New Ecology," inviting 1,000+ distributors, 500+ brand owners, 200+ B2B platform founders, and 100+ investment and financing institutions to explore a new chapter of cross-border integration! Core topics of this conference:
How the FMCG industry can leverage B2B to achieve new growth opportunities
How to build the new supply chain behind new retail
How intra-city logistics can help B2B achieve leapfrog development
Highlights of this conference:
The industry's first "2017 China FMCG B2B Industry Competitiveness White Paper"
Case sharing of excellent distributors in transformation and upgrading
Exhibition upgraded: Hall 6 Internet Technology Exhibition strengthens connections
Alibaba Retail Link, Global Logistics Properties Finance, Eternal Asia Supply Chain, Best Dianjia, Yijiu Pai, Unilever, Haiding Technology, Yunmei Co., Ltd. - leaders from the most well-known companies in various fields will deliver speeches and share pioneering views.
October 17-18, 2017 Chongqing International Expo Center Registration is now open. Long press the QR code below or click "Read Original" to register. Early bird tickets before September 15 enjoy a 30% discount! Add friend with note "Conference Registration" Click the links below to review the highlights of the first and second FMCG + Internet conferences: 2016 "FMCG + Internet" Summit Forum 2017 (2nd) China FMCG + Internet Conference Click the links below to review the highlights of the first and second FMCG + Internet conferences: 2016 "FMCG + Internet" Summit Forum -END-