Distribution is recognised as a key element within an integrated and well-managed supply chain. Sufficient data flow is needed in order to create a source of competitive advantage.Distribution takes in both the physical movement of goods and the setting up of intermediary relationships to guide and support the movement of products into the wider marketplace.
Choosing a DistributorIn choosing a distributor, the following are a number of key steps that will help guide you.
- Select your target market: Be very clear on which market you want to target. When doing so, take into account the strengths of your own company. Go to understanding the market for market research tips.
- Do your homework: They say to fail to prepare is to prepare to fail. The more homework you do and the more information you gather, the better the chance you have of successfully choosing the right partner.
- Talk to the trade: The experiences of others can help you in making the right choices. Talk to other manufacturers, buyers and store managers.
- Market research: The best way to see how a distributor handles products in the market place is to look at their overall performance. This will also give you an idea of how your own products could fit in with their portfolio.
- The checklist: Asking key questions will help you gather relevant information.
- Years in business
- Sectors serviced
- Sales structure
- Trade feedback
- Payment terms
- Sales information
- Be confident: Emphasise what your company can bring to the table when in discussion with any prospective distributor. Remember it is a partnership; so while you need a good distributor, the distributor equally needs a good supplier.
- Compare and contrast: In order for you to decide on your ideal partner, you need to compare the qualities of all prospective distribution companies. A good way of doing this is a distributor comparison matrix, which lists the key qualities of each operator.
- Deciding on your distributor: The decision on which you should choose could be complex as some distributors will have certain qualities that others don’t have and vice versa. One company may not have everything on your wish list. It may be necessary for you to prioritise and make a decision on who can provide the best offering, even if they are lacking in certain areas. Very often, there will be very little difference between distributors and your decision will come down to a “gut feel” as to who can best do the job for you.
- The contract: This document will form the foundation of your relationship and should incorporate all the elements required to successfully drive your business forward. It should also be a clear agreement between both parties detailing the responsibilities and directives that each party must carry out.
- Finally as in all aspects of life including business there will always be change. It is important to continually review your business model and adjust your goals accordingly.
Managing a DistributorNow that you have chosen your distributor, the work really begins! For the purposes of achieving maximum commercial success, both you and your distributor will need to work hard at developing and advancing the relationship. Some tips that will help:
- Targets: For an effective business partnership with your distributor, some form of measurement will need to be in place with regard to sales. Having a defined set of targets is the best way of doing this. These targets should be in agreement with the distributor and will need to be reviewed on a regular basis. All of this should be in the contract.
- Keeping control: It is important to remember that although your distributor is your representative, you should maintain the relationship at key account level (with the buyer). This ensures that you do not have an over-reliance on any one distributor
- Relationship with your distributor: Any healthy relationship requires the parties concerned to talk in order to successfully work together as a team. It is important to keep the doors of communication open at all times, thus allowing you to raise any issues of concern.
- Weekly phone contact with distributor: Contact should be ongoing and the development of a focussed relationship with your distribution company’s account manager will help you to grow and develop your business. Ideally, contact should be made on a weekly basis.
- Weekly sales reports: Your distributor should be providing you with weekly sales reports showing sales performance versus targets. This report should list all the retail/foodservice outlets where your product is currently stocked.
- Quarterly review meeting: It is vital that you review progress with your distributor once per quarter, at a formal review meeting where sales performance and targets are compared. The objective of this meeting is to review progress based on results achieved and to alter targets as well as overall strategy if necessary.
- Annual senior review meeting: Equally important is the need to draw a line in the sand once per year to assess how the joint business is progressing and to identify potential business opportunities. You will need to be commercially minded about the partnership thus necessitating an in-depth performance review annually.
- Minimum of two full sales force meetings per year: Your distributor’s sales force is effectively your sales team on the ground. You need to put considerable effort into educating them and providing them with relevant information relating to your product range. This will equip them to grow sales in the marketplace. Briefings and product tastings for reps and telesales staff can reap enormous benefits.
- Minimum of one price review per year: You must review your pricing annually as there are certain increasing costs. You will have no choice but to pass these through to your distributor or retailer/foodservice outlet.On the other hand, you must be perceived as efficient and be able to demonstrate to your distributor that you have cost reduction strategies in place. These will absorb/deflect many of the increases you get from your own suppliers creating a sense of confidence that you are only passing on those costs that are absolutely necessary.Remember, if you accept price increases from your own suppliers and service providers and you do not pass these on to your distributor, you are reducing your own business profits.
- Review strategy: Despite the best efforts of both you and your distributor, sometimes sales do not materialise as planned. You need to recognise this, and react rapidly with a new sales strategy for the product. Additional promotions, new listings, sales force reviews, fast track NPD, etc. should all be harnessed to re-energise the relationship and drive sales forward.
- Management by walking about: A simple policy of visiting stores and calling into a number of customers to see how your product is performing is a great way to stay in touch and measure your distributor’s performance. It also sends a strong message to the distributor’s team that you are fully in touch at trade level.
Distributor SearchBord Bia has recently updated its online distributor search service. This is an online database designed to assist food and drink producers in their search for a distributor. You can search for a distributor by:
- Sector – Retail / Foodservice
- Service offered – Wholesaling, Sales and Marketing, Transport and Warehousing, Manufacturing/ Processing
- Product Type – Chilled, Ambient, Frozen, Fresh, Organic
- Geographic coverage provided by the distributor
- Search for a specific distributor by name