Our “Manufacturer Partners”

It’s an odd phrase, isn’t it? “Manufacturer Partner.” I have to admit that I’ve never put too much stock in the phrase, as it sounds like a contrived corporate term (see “core competency” or rebranding staff and co-workers as “associates”). I’ve spent a little too much time writing myself to not spot when someone is trying to redefine things and alter meaning by doing a little wordsmithing (Think “sanitation engineer” – no matter how you slice it, that person is dealing with dumping garbage). Lately, the second half of that dynamic word tandem “Manufacturer Partner” has come into serious question by more than just skeptics like me. Why? Well I find it easier to illustrate with a fictional story about two “partners.” Let’s call them Don and Big Sal. For the sake of my little narrative, Don will represent Distributors today, and Big Sal will represent Manufacturers.

Imagine Don and Big Sal got together and decided they should become business partners. PARTNERS. They start up “WidgetCo” to sell their line of industrial wares to customers in the Tri-State area (you can pick which three states – it’s fiction). Don is a great guy, works hard, and is the one who manages the store and territory – the guy in the trenches, so-to-speak. He interfaces with the customers, takes and processes the orders, dispatches the deliveries, and makes on-site sales and technical service calls. He’s the operations half of the partnership, clearly. Big Sal also plays an important role in this new partnership: He’s provided half of the funding for inventory and assets, and had the vendor relationships in place to get the business going. Big Sal really is the guy who cut the deals and found a way for WidgetCo to get product, but Big Sal isn’t from the Tri-State area. He lives in the South Bay region, about an hour and half flight to Tri-State. Distance really isn’t a hurdle, because his job isn’t managing customers. He really just needs to make sure Don has what he needs to keep products flowing to WidgetCo, and WidgetCo distributes to their new and expanding customer base.

Things go just fine for Don and Big Sal for years and years, with Don keeping things rolling on the ground in Tri-State, and Big Sal making sure the latest and greatest widgets were shipping into the ever-growing WidgetCo warehouses. Customers were happy, Don was happy, and though Big Sal didn’t spend much time in the stores or in the area, he was content to see the business thriving under Don’s management (and it didn’t hurt that he received a regular paycheck from the business).

But then something changed. Big Sal started to feel like WidgetCo could be doing far more than it was. The growth was nice, but Big Sal thought it should be at a faster pace. He wanted more. He had been reading articles, researching online and attending big business seminars, learning about what other widget suppliers were doing, and started to be concerned that there were other places customers in the Tri-State area could buy their products. Plus, of course, the internet was universally accepted as an ongoing threat to the business (well, all businesses, from what Big Sal was hearing). He felt like things needed to change.

Big Sal had many other businesses besides WidgetCo, and he had the staff and resources to pay for a random phone survey to be done on WidgetCo. Without Don’s knowledge or input of the process (or the ability to even assist with the scope), Big Sal put together a massive report and PowerPoint presentation, featuring all the data he and his team from South Bay had come up with. The results of the survey data seemed to indicate that people in the Tri-State area did indeed buy from other suppliers, from other channels, and most had no idea who Don was at all. Though this had probably been the case for many, many years (because there really was no baseline data to compare to), Sal was NOT pleased. Don, absolutely speechless and shell-shocked at the new “data,” really didn’t know how to respond. He thought Sal was coming in to talk about how well the business was doing, not about all these things Big Sal thought was wrong. But being a good partner, Don took in all the data and information and did what he could to adjust to Sal’s concerns. He would work twice as hard.

Many months passed and though WidgetCo continued to grow and thrive, Big Sal just couldn’t get past the feeling that their business was not growing as fast as it should, and that Don wasn’t producing enough. In a follow-up meeting Big Sal disclosed to Don that he had been calling their customers directly and was asking them about Don specifically. Though insulted, Don tried to put his energy into improving their business, rather than focus on finger pointing and blame. They were partners after all, and Big Sal kept saying that he was doing this for Don’s own good, and with years of trust and success behind them, Don took that at face value. By Sal’s request, Don hesitantly allowed Sal more and more access to day-to-day operations and customers.

Now getting deeper into the business and with even more access to data and sales information, Sal started looking at specific selling prices to customers (something he had never done before), questioning why WidgetCo’s sales weren’t as strong in some areas, and wanted to visit with some of the customers himself. Clearly he didn’t know the area, or the customers specifically, but Big Sal knew BUSINESS. He was an accomplished businessman, and though Don was a nice enough man, Sal felt like he needed to be more involved now in their partnership. Sal moved from reviewing past sales and started suggesting selling prices to Don, and dictated that he would need to see the specific sales data for every customer, every sale. Though nothing was failing, he began to feel more and more convinced that Don was the reason WidgetCo wasn’t growing fast enough. Again, wanting to be a good partner, Don adjusted to Big Sal’s demands and began selling at the pricing outlined by Big Sal, even though it meant significant confusion among WidgetCo staff and customers, and generally complicated every day and every sale in the business. Things were getting muddy and confusing for everyone, but that wasn’t the worst part.

A chasm was starting to form between the two, and their partnership was becoming weakened. Don didn’t understand why Big Sal wasn’t content with the consistent and growing business and felt resentful as Big Sal, who only flew into Tri-State once every couple of months, demanded more and more information and more and more input on the daily operation. Their partnership was changing. Where once there was a balance and each had their roles in the business, the lines were now blurred with Big Sal getting his fingers into more and more details of the business, questioning everything Don did.

And this is really where they started to divide. Don, understandably, started to withhold information, tired of the constant scrutiny, and angry that any data he ever gave Big Sal seemed just to be used against him. Of course, seeing Don pull away and become more distant and distrusting prompted Big Sal to start working twice as hard to shore up relationships with the few WidgetCo customers he had met. The division and intent was clear now: Don and Big Sal no longer had each other’s best interest in mind, no longer had defined roles and, most critical of all, they no longer trusted one another.

Big Sal got busy setting up his own side business selling certain widgets through his online sales site www.bigsalco.com, feeling like Don had done a poor job in that market (or “channel” as Big Sal liked to call it). Though initially he offered Don a commission for anything bigsalco.com sold in the Tri-State area (and even featured WidgetCo on the website as a local partner), eventually Big Sal just shifted his internet sales business to compete with WidgetCo directly. He also began having some of his other businesses call into WidgetCo’s territory directly, feeling like he just couldn’t count on WidgetCo.

Don was now finding himself very motivated to find another partner altogether. He DID know the region and had a loyal customer base, and even if it meant breaking up WidgetCo, he was certain that the trust and relationships that he built over years and decades would always win over fancy websites, marketing campaigns, PowerPoint presentations, and people selling in his region from South Bay or anywhere else in North America.

What about the WidgetCo customers? Well they began to find themselves in-between two partners, which is never comfortable. They liked both Don and Big Sal, and really didn’t want to choose between one or the other (and didn’t like being part of the conflict or a part of Big Sal’s “surveys”), so they started buying from companies they hadn’t even considered before like FastenCo and HomeRanger, taking revenue and income away from both Don and Big Sal.

How does this story end? Well we don’t know yet. Don and Big Sal are clearly at a crossroads. It would be a shame for them to throw away all the years of work and effort it took to build their business. The history of success is there, and the relationship could be resurrected, but Big Sal has to find a way to trust his partner again. Big Sal could step back and realize that regardless of random surveys and what he thinks he knows of a region, he and Don made a good team – If he’d just let Don run the business and manage the customers like he always has.But it’s hard to go back to the old partnership once Big Sal had invested so much in data mining, call centers and his new online business, especially when all his big business friends are all doing exactly the same thing.

What is clear to everyone (staff, customers and peers included), is that WidgetCo is no longer a partnership. Partners work together to achieve a common goal. Partners trust one another and have a relationship that transcends just data, just sales, and just business. Partners don’t go around each other or blame one another. And I’m not sure that I’ve ever heard of partners that compete directly with one another like Don and Big Sal – Well they wouldn’t be partners for long anyway.

We are at a crossroads now, and it may be time to remember what made us all, as an industry, successful. If we do not renew our commitments to one another and start rebuilding some of that lost trust immediately, we run the risk of causing the term “Manufacturer Partner” to be as ironic and comical as terms like “Government Intelligence.” Only time will tell.

Gases and Welding Distributors Association
Dale Wilton Meet the Author
Dale Wilton is President/CEO of Central Welding Supply in North Lakewood, Washington, and at www.centralwelding.com.