With concerns over supply chain stability, manufacturers and their distributors must work together. GovPro.com‘s Mike Keating illustrates steps that some firms are taking and the tools they are using to make the partnership work.

For TimberTech, the Wilmington, Ohio manufacturer of decking, railing, fencing and lighting products for residential and commercial markets, having good distribution is one of the keys to establishing the firm’s products in the marketplace.

“Not having a distributor committed to a product line can hinder market penetration,” says Kevin Brennan, TimberTech’s senior VP of sales and marketing. “With the focus on inventory at all levels of a specific channel, a manufacturer has to be prepared to deliver products meeting the time expectations of the customer. Late shipments can cost business.”

The need for timely delivery is one reason Port Washington, N.Y.-based DriMark Products opted for a new distribution alliance, with distributors in Minnesota and Canada.

Cathy Williams-Owen, DriMark’s president, explains the new distributor setup: “In the face of increasing costs, DriMark, as a U.S. manufacturer, can help our customers maximize cash flow and meet the demands of just-in-time inventory.” Williams-Owen notes that rising prices and costs in China was another factor in inking a deal with domestic distributors.

DriMark Products makes writing instruments, security marking systems and inks. It also manufactures counterfeit detection products for the retail industry.

Communication is Critical

Basic communication is crucial in the manufacturer-distributor partnership, according to Robert Nadeau. Nadeau is the managing principal of the Highland Park, Ill.-based Industrial Performance Group, a firm that helps manufacturers and distributors increase sales, improve profitability and better manage relationships, processes and practices in supply chains and distribution channels.

“Despite the fact that we have a phenomenal array of technology for communication, the actual sharing of pertinent information between manufacturer and distributor is terrible,” Nadeau says. “You have a whole generation of younger folks who don’t know the art of conversation, so what they are really good at is just burying each other with electronic information, or if you take it to the next level, it’s just data, and who has time to sift through that to find out what it means?”

Face-to-face sessions between manufacturers and distributors are important, Nadeau adds. “Get back to the basics of getting together and just discussing what do you see happening, and how is it impacting your business, and what can we do to help, and what does the future look like. It sounds simple, but executives tell me that with budget cuts, they don’t ever have time to sit down and close the door and look their partners in the eye and have a conversation with them.” (Click HERE for more communication tips.)

Enhanced Technology and Analytics in Supplier Relationships

In its latest white paper on the industrial distribution sector, Modern Distribution Management (MDM) notes that distributors are adding e-commerce capabilities. Another MDM report explains how distributors can achieve social media marketing success. Industrial Distribution recently outlined how supplier relationships can be better managed with enterprise resource management, and Web 2.0 technology and Software-as-a-Service (SaaS) products. The National Association of Wholesaler-Distributors’ latest Facing the Forces of Change research study says manufacturers and distributors are demanding that their partners speedily deliver targeted analytics.

Dan Petlon, CIO of Andover, Mass.-based Enterasys Networks, a Siemens Enterprise communications company, says one trend he has seen in manufacturing-distributor relationships is information transparency. Enterasys is a provider of wired and wireless network infrastructure and security products and systems.

“Quickly and easily sharing information is critically important and the cloud is driving much of this change,” says Petlon. “As companies adopt and leverage cloud-based solutions like Salesforce.com and Channelinsight (a cloud-based automated channel sales management solution), the expectation from both manufacturers and distributors is that the information flow will improve and occur in near real-time.

“It is no longer sufficient to share data on a monthly or weekly basis. Cloud solutions like Channelinsight allow Enterasys to consume and share information at a much faster pace,” Petlon continues. “Distributors and manufacturers increasingly want to align processes to drive down costs and improve efficiencies. Channelinsight is a key part of Enterasys’s channel strategy.”

Epicor, an Irvine, Calif.-based business software provider, has its thumb on the pulse of supplier alliances. “Epicor has been developing business software solutions to meet the needs of manufacturers and distributors for more than 25 years,” Mike Tatara, Epicor’s manager of product marketing, explains to IMT. “Now more than ever, the manufacturer-distributor relationship is all about communication and collaboration to resolve problems quickly and efficiently.”

Epicor is investing in Enterprise 2.0 technologies to drive collaboration, innovation and, ultimately, successful partnerships. “Epicor is investing in other leading-edge technologies that drive the manufacturer-distributor relationship,” Tatara says. One example is cloud-based applications that provide quick access to new functionality without additional IT-related investment, such as an e-commerce platform that allows for channel expansion and increased service to customers and suppliers.

Epicor’s mobile solution, according to Tatara, “facilitates field service and sales, and allows distributors to provide an additional layer of service on behalf of manufacturers.”

Cracks can develop in even the tightest manufacturer-distributor partnerships. Industrial Distribution’s “The Fragile Nature of Distributor-Manufacturer Relationships” discusses the mammoth contract dispute that erupted when Starbucks announced its intent to end a 12-year distribution agreement with Kraft. The article has tips on how manufacturers can protect themselves when entering into contracts with distributors, and how manufacturers should address contract conflicts when they arise.

Michael Keating is senior editor for Government Product News and a contributing editor for American City and County, both published by Penton Media Inc. His 2011 government budget forecast is available at GovPro.com. He recently wrote about DIY market research for manufacturers and the 2011 industrial buying outlook for IMT. Keating has written articles on the government market for more than 100 publications, including USA Today, Sanitary Maintenance, IndustryWeek and the Costco Connection. Mike can be reached through his website, MikeKeat.net.