Good distributors have to do a lot more than move products from point A to point B to keep their customers satisfied -- they must provide low prices, quick delivery, technical assistance and superior service. Are today's distributor's giving their customers what they want, when they want it?
November 1, 2000
Distributing cabling and related products used to be simple enough. “Historically, distribution was viewed as simply a group of warehouses and customer service representatives selling products,” says Tim Emoff, VP of program sales at Anicom Canada, one of this country’s major cabling distributors. This is no longer the case. Not only are customers demanding lower prices as they struggle to cut their own cost of doing business, but they are asking more of their distributors — such as faster delivery, emergency services and technical assistance.
Of course, price is an issue in any supplier relationship, but for most customers it is not the only or even the most important one. A distributor must offer competitive prices, but saving a few cents is not worth shopping around from distributor to distributor.
“There’s always someone who can get it cheaper,” says Keith Fortune, communications facilities manager for the Bank of Montreal, “and there are sometimes problems with getting it cheaper.” One is that the distributor may not have the parts readily available — and having the lowest price does very little good if you can’t supply the product when and where the customer wants it.
“I want to be able to contact one person and he takes care of all the logistics for me,” says Ken Darlison, data communications manager for Burman & Fellows, a North America-wide contractor based in Toronto. Darlison says he can do that thanks to the close relationship he has built with his distributor — Wesco International Inc. — over the past year and a half. An important result of such a relationship is trust, Darlison says. And when something does go wrong, “we don’t beat each other up — we just fix it.”
Bob Jessop, sales and installation manager at Dar Computer Inc. in Richmond Hill, ON, prefers to establish a long-term relationship with one distributor rather than “nickel-and-dime” distributors and play them off against each other. Dar Computer, which Jessop describes as a full-service integrator that does computer and networking work, has had such a relationship with Wesco for several years. “The main focus that I’ve always had is to create a good trade relationship … so that they provide me with a quality service — that being timely delivery to my job site et cetera,” says Jessop, although “certainly a competitive price structure is important also.”
And while Jessop doesn’t do the rounds of distributors, looking for discounts on everything he buys, he believes having a close relationship saves him money in the long run. Wesco sometimes lets him know when it has excess items or short lengths of cable to dispose of at discount prices, he says, and because of the volume of business he does with the distributor, he can get small orders delivered at no extra charge.
The relationship is not exclusive, though. Jessop also deals with other distributors, such as Anixter International Inc. and Nedco. That seems to be typical — most customers use more than one distributor at least occasionally, even though they may have a close relationship with one preferred supplier. One reason is that some distributors have access to product lines others do not. Immediate availability of parts when time is tight might also be an issue, or a contractor’s own client might prefer the contractor use a distributor with which the client has a relationship.
And while strong relationships are good, competition and choice are also important. That’s why Fortune has ongoing relationships with two major distributors, Anixter and Anicom. Relying on one distributor for everything is putting all your eggs in one basket, Fortune maintains. But he also echoes Jessop’s view that relationships matter. Fortune says it is important for a distributor to understand the bank’s business and needs, and that he gets the same service whether he is rewiring a downtown Toronto office tower or “doing a $2,000 add-a-few-drops in Yellowknife.”
For some, the distributor’s technical expertise is a key factor. Some distributors have Registered Communications Distribution Designers (RCDDs) on staff, and can help their customers solve technical problems or give advice about installations. How much difference that makes to a customer depends largely on the amount of expertise the customer has in-house. Fortune, who uses experienced contractors for major projects, says it makes little difference in those cases, but “if you have a small project you don’t have consultants working on, that can be an advantage.”
For Jessop, himself an RCDD, it’s less critical. Still, he says, if there is a problem it’s nice to be able to call someone with technical expertise to help work it out. And while Jessop says he might just call a manufacturer directly, he adds that his distributor can sometimes help him get results faster.
SUPPLY AND DEMAND
Perhaps most important on the list of requirements, is the distributor’s ability to supply what the customer needs, when the customer needs it. “I don’t want to have a problem where we don’t have the material and the job can’t be done,” says Fortune. So distributors must have the goods.
“Products such as single-mode fiber cable are expected to be in inventory at all times,” says Emoff, “regardless of worldwide shortages on raw materials.” To do that, he says, distributors need good inventory management systems and a solid handle on what their customers will need.
To make sure the goods are there when needed, the distributor also needs a presence wherever the customer might need service — “you want to have a distributor that is big enough for your company,” Fortune says. And size is not everything — consistency is important too. Darlison says he has found that with many large distributors, the fact that he can get a product in Toronto does not mean he can get it from another location. Different locations may stock different product lines, so “if you need to do business with any of the other branches you need to establish a relationship with them,” he says.
The distributor also has to keep enough inventory and do a good job of anticipating the customer’s needs so that orders do not catch it unprepared. Some distributors even keep dedicated inventory on hand for their larger customers. “They’re having to become more creative in how they store their materials and how they ship it and so on,” says Jessop.
Yet it is not only the products themselves that have to be on time. Customers want quick responses to their questions and their requests for quotations, timely information about product availability, and the like. It comes down to “the overall confidence level that the customer has,” says Dan Drazilov, national sales manager for Canada in the datacom division at Wesco.
LOOKING FOR ANSWERS
Of course, no matter how hard distributors try, things will still go wrong from time to time. So customers want to know who to call when that happens, and they expect answers. Fortune says he needs service 24 hours a day, seven days a week, with clear escalation procedures so his staff know what to do when they have a problem. Darlison says the number-one thing he wants from a distributor is the ability to “get a hold of somebody and speak to them directly.” Availability of materials and good logistics are numbers two and three, he adds.
For all of these reasons, distributors must know their customers well. Besides understanding what the customer needs and being ready to supply it promptly, the distributor must have a grasp of how the customer does business and pay attention to any special requirements. “You want a business partner in today’s marketplace,” Fortune says, “not just a supplier.” To that end, Drazilov says Wesco makes a point of visiting its customers regularly and talking to them about how it can help them do their jobs better.
Customers like Fortune also want distributors to help them track projects with information such as what products they have purchased and how much money they have spent. Customers also want to be able to check the status of an order quickly and easily. While online
systems will probably be the long-term answer to this, Darlison says that today he just expects to be able to make a phone call and a get a prompt and accurate answer.
Just as customers want their distributors to be big enough, they may also want them to be small enough. Some smaller companies prefer to deal with smaller distributors, simply because they feel their business means more to those suppliers.
Some Canadian distributors operate coast to coast, while others are more regionally focused. Anixter and Anicom are generally regarded as the biggest names. Interestingly, the two competitors were founded by the same family — brothers William and Alan Anixter set up Anixter in 1957 and then sold the firm to investor Sam Zell’s Itel Corp. in 1986. A few years later Alan and his son Scott Anixter founded Anicom. Both are US-based organizations, with substantial operations in Canada with offices across the country and headquarters in the Toronto area. So is Wesco International.
Nedco, based in Mississauga, ON, is a unit of Montreal-based Westburne Inc., a distributor of building materials and electrical products. It also operates nationwide. Graybar, a major national distributor in the U.S. and a long-ago spinoff from Western Electric Co., has a strong presence in the Atlantic provinces and a handful of offices in Ontario.
Anixter emphasizes value-added services. For instance, the company employs staff with RCDD credentials who can help customers with design work. In addition, Anixter has its own testing labs that evaluate products for performance and interoperability. Graybar also has a testing program, though it has testing conducted by an independent testing lab. Some contractors question the objectivity of internal testing programs. Others, such as Darlison, say the testing programs are a good idea and can give customers an added level of confidence when choosing products.
So how are Canada’s distributors doing at providing all of this? Not too badly most of the time, according to customers Cabling Systems talked to. Some are better than others at providing technical support. And responsiveness to customer orders — especially to smaller orders or orders from smaller customers — varies depending on how busy the market is and, as one contractor put it, how hungry the distributors are at the moment.
The next step for distributors will probably be e-business. Since customers are concerned with getting what they need quickly and conveniently, business-to-business e-commerce is a logical development. “This electronic transfer of information will allow customers to place orders online, to check the status of these purchase orders,” says Emoff. Customers will probably also want the ability to check availability of parts and review their accounts. “In the next two years I think we’ll probably have online tracking for everything,” Darlison says.
An example of things to come might be Anixter’s e-business site, called eAnixter. After several months’ operation in Europe, eAnixter was introduced in the United States for testing early this year. Initially it just allows existing customers to track order status, but Anixter’s plans call for adding online procurement and extending eAnixter worldwide this year.
Drazilov says another trend has distributors becoming more focused. At one time every distributor had access to almost every manufacturer’s products, though there have always been a few product lines available only through one or two distributors. Now, while distributors may still be able to sell all the products, Drazilov says they are starting to focus on one or two lines.
In the end, customers — whether contractors or end-users — are asking more of their cabling distributors. It seems that distributors are doing a fairly good job of responding to their demands. No doubt they will have to continue doing so if they want to thrive. “If you become basically an order house where you have a lot of people sitting at a desk and taking orders,” Drazilov says, “you won’t be exposed to a lot of the business.”CS
Grant Buckler has written about information technology and telecommunications since 1980. He is now a freelance writer and editor living in Kingston, ON.