* Offer new fee-based services that directly improve the customer's profitability and operations. Distributors can leverage existing relationships, build on traditional competencies, offer new value and be compensated appropriately for the new value added that is provided.
* Remain a cost-effective channel by encouraging self-service by customers to reduce costs and boost internal productivity. Self-service should be the default alternative for customers whose level of spend does not justify labor-intensive interactions. Many distributors are already seeing internal cost reductions when customers begin entering their own orders.
* Train your sales force for tomorrow's challenges. Salespeople, who are accustomed to selling on price, will need training to compete in the evolving world of services and solutions. Evaluate each of your salespeople to determine if he or she needs training in qualifying customers, uncovering problems, identifying solutions or bringing the company's resources together for problem solving. Make sure compensation plans are based on customer-focused needs, not just on history.
* Act now to reinvent supplier relationships. Online auctions will force distributors to cut back on salespeople and request more drop shipments to customers, undercutting the fundamental distribution role desired by manufacturers. If distributors do not take the lead, manufacturers will simply take more and more business direct.
* Offer unbundled supply chain solutions to suppliers and customers. Distributors of all sizes are leveraging technology, warehouse infrastructure and logistics as a fee-based service without performing sales and marketing activities.
By adopting these and other strategies, your company can successfully seek out new paths to profitability.
About the Author: Adam J. Fein, Ph.D. is the founder and president of Pembroke Consulting, a firm that helps wholesale distribution, manufacturing and B2B technology companies build and sustain market leadership. He can be reached at (215) 523-5700 or on the Web at www.PembrokeConsulting.com. This article is adapted from Facing the Forces of Change: The Road to Opportunity.