Page 7 - UnderstandingJanSanRedistribution_flipbook
P. 7

Two Good Reasons for Manufacturers to Use Wholesaler Redistribution

                   Sanitary  Supply manufacturers enter  into wholesaler  redistribution  programs  for  one  or  both of  the
                   following reasons:
                       1. To reduce costs
                       2. To build volume

                   The cost-reduction opportunity stems from the recognition that customers who submit small, infrequent
                   orders cost a lot more to serve than those who submit regular large orders. As we shall see, these costs
                   extend far beyond the freight premiums generated by multi-stop outbound loads. And although present-
                   day accounting systems sometimes fall short of clearly quantifying these costs, there is growing awareness
                   of the importance of digging below “company averages” to understand the true cost of serving these
                   Of equal or greater interest to manufacturers is the opportunity to penetrate new distributors that would
                   not be available through direct service. Wholesalers serve a wide range of accounts that are hard to reach
                   via traditional supply chains. These include not only small distributors who lack the volume or space to
                   meet order minimums, but various “non-mainstream” distributors who are often unknown even to the
                   local sales force. The value of this access to incremental volume is another important factor in the cost/
                   benefit calculation.

                   Successful  manufacturers  have  designed  and  implemented  wholesaler  redistribution  programs  which
                   accomplish both objectives.

   2   3   4   5   6   7   8   9   10   11   12