Raising the Bar

Edition: November 2002 - Vol 10 Number 11
Article#: 1350
Author: Repertoire

The National Association of Wholesaler-Distributor’s crystal ball is cloudy but always thought-provoking. We’ve heard most of the predictions that NAW makes in its recent report, Facing the Forces of Change Outlook 2003 (see article in this month’s Repertoire). But it never hurts to cover old ground, even if that old ground is the future.

NAW predicts that:

1. Wholesale-distributors will continue to be important supply chain players.

2. On-line ordering will be adopted, but more slowly than originally thought.

3. Distributors will start charging for services that they have been offering “for free.”

4. Customers will look more to the Internet – and less to their sales reps -- for product and manufacturer information.

5. Customers will continue to concentrate their purchases through fewer distributors.

6. Manufacturers will explore new distribution options, such as third-party-logistics providers.

7. Manufacturer-distributor relationships will evolve.

Although distributors are and will remain important to manufacturers wishing to avoid the cost of going direct, they will face their share of challenges, says NAW. One of them is (still) the Internet. No, no one’s predicting that the Internet will “disintermediate” distributors. But, according to the association, customers are using the Internet to gather product specifications, warranty and rebate information, etc. That’s not news to anyone.

But then the association makes this leap: “[O]nline technologies are giving customers lower-cost, higher-service alternatives to a wholesaler-distributor’s salesforce. As a result, the role and activities of the salesforce of the future will be significantly different from today’s. When the role of a distribution salesforce has declined, as in channels such as pharmaceuticals or automobiles, distributor margins also drop, since the intermediary is adding less value.”

That might be true in those industries mentioned, but what about health care? Is it true that the availability of on-line product information devalues your service to your customers? I doubt either you or your customers think so.

On-line information raises the bar. It helps your customers get better educated on the products and technologies you sell, so their questions are better-informed. That challenges you to provide them with something that the Internet cannot –that is, the time to discuss the best products for their practice, hospital or long-term-care facility. Sounds like a more interesting way to spend a day than looking up product specs.

We all have a few ways to approach a bar that has been raised. We can walk away from it, duck under it, or leap over it. The Internet’s giving us an opportunity to make that choice all over again. Those who want to get better will accept the challenge.