Plural Noun; Core Competency- The activity a company is most proficient at. A manufacturer’s “core competency” is making a product, or products.
Setting up inventory management and distribution is not part of a manufacturer’s core competency. Using distribution allows a manufacturer to limit its cost exposure from distribution, and administrative expenses that accompany distribution and focus its resources on efficient manufacturing techniques, and primary sales.
The best way for you to know if working with a distributor can increase profits of your existing company is to;
(a) examine your overhead involved with distribution,
(b) calculate the percentage of gross revenue you are paying, and
(c) factor in a projected bump in sales from not using your sales reps for non sales related activity, having a distributor as an added secondary sales channel, and added customer satisfaction and reach.
METRC Administration – How much do you pay in work hours, and ID tags for each METRC transfer. By working with a Distributor you could reduce that to just a few tags/transfers a week, or less!
Delivery Drivers – How much do you pay in wages, payroll taxes, payroll administration, insurance, and other support services per month
Fuel, Insurance, and Vehicle Maintenance – How much do you pay in gas, insurance, and vehicle maintenance per month?
Retail Delivery Logistics – We all have those special accounts that require more time and effort to coordinate deliveries. How many hours in a month do you pay for; scheduling deliveries, confirming orders, and coordinating delivery routes?
Retail Reorder Contact – What does it cost you in labor hours to stay current on retail inventory levels, and ordering cycles?
Brand Ambassadors, or Delivery Drivers? – Is it a better use of resources to have your sales reps delivering products or supporting your brand?
Returns & Recalls – During such an event the distributor becomes the initial lightning rod for retail, thus spreading out some if not all of the damage this could cause to a company’s reputation. How much does it cost in dollar amount and reputation to facilitate a recall, and/or return?
Paper Trail – How much will you save by having a comprehensive paper trail for taxes, inventory, and sales data compiled with each payment and at the ready
Product Storage – What are you paying in utilities? Use our coolers not yours
Benefits of Working with a Seasoned Distributor
Market Expansion: When a manufacturer decides to sell to a new geographical market, a distributor can offer an established retail network instantly.
Customer Service: A manufacturer can turn over much of the responsibility of administering customer service duties to its distributor and reduce the manufacturer’s need to invest resources in most day to day customer service needs.
Market Research: Distributors deal with retail clients on a regular basis, and those retail clients sell to your end users. If you want to do market research on a current product or get input on new ideas on which you are working, a distributor can facilitate the collection of that information for you directly from end users. Allowing you to utilize a distributor’s network of retail clients to keep updated on customer preferences.
Storage & Logistics: Using distributors also means that you benefit from a significant amount of storage space without the need to invest in physical premises to store your products.
Wider Distribution Channel: By using a distributor your business can benefit from a much greater distribution channel without the need to have a physical presence in each territory. This means not only can your products reach a much wider consumer audience increasing sales but you can also make significant financial savings through not requiring additional premises and staff.
Quick Route to Market: Another major benefit of using distribution to take your product to market is the speed at which your products can reach consumers.
Reduced Risk and Compliance Confidence: To overcome and stay on top of complex regulations, manufacturers need a trusted distributor. This includes an easy-to-view audit trail. Having a single source of distribution gives greater shipment integrity, which reduces the risk of error, loss and damage. Purchases are easier to track in one management tool, giving the manufacturer accurate shipment information and visibility to the entire chain of custody.
Efficiency is Time: Timely deliveries are crucial for the manufacturer and their retail partners, that’s why efficient, regular, and dependable route schedules are a must. Shipments are consolidated into one delivery, resulting in fewer interruptions and less staff time spent receiving and checking product. And of course having a single distribution partner reduces that time-consuming paperwork. With fewer packing lists to reconcile, fewer checks to cut and fewer returns to coordinate, productivity increases.
Improved Cash Flow: Having a single distributor provides financial benefits for a manufacturer, including cost savings on delivery charges and on returns which should be hassle free, with credit being applied the moment the returned product is received.
Secondary Sales Channel: You will always sing your song better than anyone else, but having a professional, well rooted secondary sales channel will always increase profitability.