In the ever-changing chemicals industry, distributors play an important role in the supply chain. From just-in-time procurement strategies to risk management, distributors can bring real value to customers. In today’s economy, distributors are relied on heavily, as customers are more likely to order smaller volumes of product more frequently. Established partnerships with distributors provide for continuity and trust of supply.
The following discussion highlights some of the challenges that chemical distributors Canada face, as well as benefits that they can offer to both customers and suppliers.
A Supplier’s Perspective
Distributors can offer unique advantages to suppliers. Effective sales channel management will lead to greater profitability, increased market share and higher customer satisfaction. Distributors may be viewed as an extension of a supplier’s sales force in markets where it is not economically viable to establish a permanent facility or direct staff.
This outsourcing of the sales function results in lower costs and allows the manufacturer to concentrate on R&D and manufacturing. With rising health-care costs, travel expenses and language barriers, some manufacturers simply would not be able to access the North American market without local distribution partners.
Distributors, such as CCC Chemical Distributor are often the first call chemists make when they are developing new formulations, as they can provide a breadth of knowledge based on experience supplying multiple components for formulations. Distributors like CCC Group are able to cross-fertilize from one product group to another and one industry to the next.
A Customer’s Perspective
Customers may sometimes wonder, Why buy from a middle man when I can just go direct at a lower cost? There are several answers, the most straightforward being that either the buyer or seller in a direct relationship will have to perform the function of the distributor. This adds cost to the equation, which can be seen in several key areas.
- From a sourcing standpoint, distributors greatly reduce risk for customers. As our industry continues to expand globally, small- and mid-sized customers have to take advantage of global sourcing to realize cost benefits and technology advancements.
- Distributors can offer product bundling, allowing customers to purchase several items from one supplier. This greatly reduces administrative and freight costs. Most successful distributors offer a complementary portfolio of products that can be combined in quantities smaller than truckload sizes. If a customer requires resin, additives, pigment and containers, they can combine them into one order from one supplier and pick them up on the day they are needed.
- Distributors can maintain close relationships with customers to gain an in-depth understanding of their processes, formulations and competitive advantages. Most distributors visit customers more often than manufacturers can. This is prevalent in today’s economy, where the cost of business travel has skyrocketed.
Working with Chemical Distributors
There are significant financial advantages to working with a distributor. Manufacturers are able to optimize production capacity, rather than trying to sell a couple of bags or single pallets to 100 different customers who speak different languages, who want custom labeling and who need immediate delivery. Furthermore, when it’s time to get paid, contacting one distributor is more cost effective than trying to collect from multiple customers.