All Suppliers Are Not Created Equal

Action steps distributors can take to manage the supplier relationship

Gases and welding distributors are classic “middlemen.” Distributors have always had a tendency to establish relationships with suppliers, then focus most of their attention and resources on customers. However, a changing landscape is demanding that distributors refocus on supplier relationships—and develop a strategy to manage those relationships, instead of just “letting them happen.”

What’s Changing
In a globalized world, change is frequent and fast. Changes affecting distributors include:

  • Consolidation of customers, demanding more national and global purchasing agreements
  • Consolidation of suppliers, affecting distributor alliances and contracts
  • Seeming “depersonalization” of communication between all players in the supply chain, including distributor-supplier communication
  • Changing fortunes of suppliers and customers that can result in unpleasant surprises: Losing a major customer is bad. Losing a major supplier or having their performance capability significantly diminished can be catastrophic.
  • Supplier management with little or no distribution experience or appreciation of the importance and challenges of distributors, resulting in poorly thought-out policies having negative effects on distributors
  • Rapid turnover of top management at suppliers
  • Transfer of traditional supplier responsibilities to distributors, i.e., inventory availability, freight management, marketing.

Any of these changes can quickly, adversely affect distributor operations and even survival. On the other hand, effective management of supplier relationships can open up significant opportunities.

Supplier Relationship Management – Whose Responsibility?
Supplier relationship management is the responsibility of distributor top management, including the dealer principal. Building and leveraging supplier relationships to enhance a distributor’s effectiveness and survival must be top-down driven. The key personal relationships are at the top. Others who must be involved include sales and marketing executives, operations management and, increasingly, information technology (IT) managers.

Where to Start?
A distributor’s primary initial focus should be on relationships with your most important “A” suppliers. These are the suppliers which, if they disappeared tomorrow, would threaten the existence of your company. Some distributors have only one “A” supplier; others have more. Then, identify the “B” suppliers—significant, but not life-threatening. All others are…well, just “others.”

The most basic step in supplier relationship management is “Do your job.” The real strength of distributors lies in excelling in your market. Then, even if something happens with an “A” supplier, you’ll be in a position to attract another. It’s also important for distributors to be perceived by their “A” suppliers as doing a good job.

How Are We Doing?
Almost all suppliers have distributor evaluation mechanisms (formal or informal). Supplier evaluation parameters for distributors often include: sales volume and growth, sales mix (selling their more profitable products), prompt payment, market share, participation in programs, customer development and customer service of national accounts. Distributors need to understand their key suppliers’ distributor evaluation system in detail, and then know how they are rated in that system. One way to do this is to ask them: “What is your distributor evaluation system, and how do we stack up?” Supplier perception of your company can be tested by your management team asking supplier visitors to your company questions like the following:

  • How are we perceived by your company?
  • What are your more successful distributors doing that we aren’t doing?
  • Where are we falling short of your expectations?

Of course, answers should be fed back to distribution top management and your supplier management team. Not meeting supplier expectations can trigger improvement efforts on the distributor’s part, discussions with top supplier management to get the story out better, requests for help from the supplier or, in extreme cases, seeking out alternative suppliers more in tune with your company’s strategies and way of doing business.

Actions to Manage Supplier Relationships
Schedule top planning meetings yearly or bi-annually with supplier top management. Distributors may need to initiate these meetings. If possible, the location should alternate between the supplier headquarters and the distributorship. The agenda should include mutual evaluation, review of key supplier programs and distributor strategies and plans, feedback about the market trends and customer actions. There should be a previously established, mutually agreed-upon agenda.

  1. Listen carefully to everything your suppliers say, particularly when it’s specifically about your company. Take it seriously.
  2. Disseminate performance reports provided by suppliers to key distributor managers. Get their reaction. If your view of your company performance is significantly different from your suppliers’ view or there are extenuating circumstances, respond to their reports formally.
  3. Let supplier management know if you are looking for more territory or product lines.
  4. Initiate intentional outreach by top distributor management to top management of suppliers. Get to know them personally. Play golf. Share meals. Go visit them. Invite them to visit your company. Share jokes. Ask about their families. Exchange letters, e-mails, etc. Blast through the impersonal e-mail, voicemail and “gatekeeper” systems. Personal relationships matter.
  5. Admit the need for help and ask for it when you are falling short of agreed-upon performance expectations in specific areas.
  6. Participate in distributor councils—give positive as well as negative feedback. Don’t be perceived as a constant whiner.
  7. Encourage suppliers to hire some management with distribution experience (not from your company, of course!).
  8. Establish criteria and rate your suppliers internally (confidentially, as appropriate).
  9. Pay special attention to supplier-distributor IT issues. Supplier requirements are growing and are increasingly difficult and expensive to meet. But they are critical to the relationship. Be sure your voice is heard at the supplier about proposed IT changes.
  10. Participate in supplier special programs, sometimes even when you don’t want to. Show up (or have appropriate representation) at meetings called by your suppliers.
  11. Seek opportunities to meet and get to know key people at competitive suppliers. Again, industry conventions and conferences provide this opportunity.
  12. Be active in industry associations. Go to conventions and meetings. These provide opportunities to build personal relationships with suppliers and opportunities to talk with other distributors about common and competitive suppliers.
  13. Encourage peer-to-peer personal relationships between distributor and supplier management and some key operations interface personnel. Expect it of your people.
  14. Consistently review public sources of information about current, competitive and potential suppliers. Read annual reports, industry publications. Get D&B reports on your suppliers. Subscribe to for business information.
  15. Seek ways to give your distributorship industry visibility. Write articles for supplier and industry publications, make presentations, send press releases on positive things happening at your company, send unsolicited letters and e-mails. This can be particularly important for distributors in small markets who need to stay visible with suppliers.
  16. Have conversations with fellow distributors about common suppliers. Get other perspectives as to “what’s going on.”
  17. Create supplier awards. Establish criteria, publicize them, invite top supplier management to town to receive the awards in a positive forum. Publicize the awards in industry publications. These get attention.
  18. As appropriate, create buying groups, strategic alliances or other associations of related distributors. Objective: clout.
  19. Create a professional atmosphere about suppliers within your company. If negative attitudes develop about a certain supplier, investigate the reasons, but don’t let casual language (which always gets back to suppliers) turn unprofessionally negative. Don’t “bad mouth” suppliers.
  20. Visit other distributors and discuss suppliers, while also benchmarking best practices.

Driving the Process
As the world becomes smaller and change accelerates, it is increasingly important for distributors to actively manage their supplier relationships—particularly the relationships with “A” suppliers. It should be a strategic, planned, monitored activity involving all distributor management, driven by distributor ownership or top management. Out of this process, gases and welding distributors have a better chance of managing change rather than just reacting. Like all relationships, supplier-distributor relationships take work!

Gary Moore Meet the Author
Gary Moore is a distribution industry veteran with over 30 years of supplier and distributor experience. After selling his regional distribution company, Moore now works as a speaker, author, trainer and consultant to distribution, focusing on sales, marketing, distributor transitions and supplier-distributor relationships. He can be reached at or 303-718-0470.


The Partnership Principle

Gases and Welding Distributors Association