Longtime 麻豆传媒 dealers are no strangers to consolidation within the industry. But dealing with the aftermath of vendor and/or wholesale distributor acquisitions can be a whole different story. From changing longtime relationships to new inventory issues, it can be a lot to handle, particularly for smaller dealers.
Our challenge has to do with the consolidation of our wholesale-distributor partners. We鈥檝e noticed that the communication from our long-time wholesale distributor partners has gone sharply downhill since they were acquired. Plus, we鈥檙e seeing more problems with inventory availability and supply chain issues than since the peak of Covid a few years ago. We鈥檇 love to learn how others are dealing with this. Any insights will be appreciated.
Responses from lumberyards, full-line building material dealers, and specialty dealers/distributors:
鈥渊ou鈥檙e not alone and I feel your pain. It鈥檚 getting increasingly more challenging to be an independent in the land of giants, especially when the giants keep buying up the smaller independent distributors.鈥�
鈥淐an鈥檛 control what others do. Do what you have to do.鈥�
鈥淗ave the hard conversation, find out the reason, and do what is right for your company. Let them know they may lose your business due to lack of performance. We have had luck with this and performance has improved. Unfortunately, vendors get comfortable with people they think are loyal to them and slack off. Every now and then they need to be reminded that this is a competitive market and they need to be an asset to you or you will move on and find a new partner.鈥�
鈥淒o business with the people that you can count on鈥攎ove on from the 鈥榥on-performers.鈥欌��
鈥淏ring up your concerns with your sales rep and his manager, and if there is no improvement, you have to start looking for new partners because someone else鈥檚 shortfalls should not affect your business or your service levels that you provide to your customers.鈥�
鈥淲e have given business to other wholesalers but unfortunately for some products we only have one distributor in our area and when they don鈥檛 have material we need when we need it鈥攊t is a nightmare.鈥�
鈥淲e are finding other vendors to fill the gap left by the previous vendor. This is a time consuming exercise.鈥�
鈥淲e have had the same experience with lack of communication with our vendors. Not only from consolidation but from turnover. On top of that, it seems more and more vendors are setting up to make everything self-serve, so they expect you to take care of everything yourself鈥� i.e. online ordering, online warranties, etc. It really takes the personal relationships we used to cultivate with our vendors out of the picture and I think it affects confidence and loyalty between us and them. Unfortunately, we have not come up with a solution to the problem either, but when we notice this happening with a particular vendor we have reached out and expressed our concerns to their management. Some have responded positively and made adjustments.鈥�
鈥淯sing buying groups.鈥�
鈥淭oo much centralized decision making with regional impact. We are trying to strengthen our relationship with remaining independent distributors. We push larger consolidated wholesalers/manufacturers to provide service and pricing at agreed upon levels.鈥�
鈥淐ovid-19 affected all availability and lead times on inventory and shipping costs. It鈥檚 slightly better now.鈥�
鈥淪earch for multiple suppliers in the category.鈥�
鈥淜eep relationships open with other vendors for this very reason. Give their competitor a few orders and see if their service is better than your primary vendor.鈥�
鈥淪ervice is poor at best. It is no longer about relationships and only about money. Longtime A-list vendors have become average at best.鈥�
鈥淚 am trying to operate very efficiently. We do a lot of special orders.鈥�
鈥淭his is very similar to what we have experienced. We have also lost long term partners who were key to many of our successes. A 20-30-year vet to a 6-year or less manager.鈥�
鈥淭his hasn鈥檛 affected us significantly.鈥�
鈥淲e get frustrated first, then work to deal with the problem. We have seen reduced turns by having more inventory to cover their outages offset by a higher sell price to make up for it. But we satisfy our customers鈥� needs. We also need to be even more diligent at reviewing every delivery, confirmation and email I order to make sure an order is correct.鈥�
鈥淭ighten up your internal communication processes and insist on the same excellence from your vendors as well as your customers.鈥�
鈥淛ust keep swimming.鈥�
鈥淟ack of communication and lack of relationship, just no connection other than price.鈥�
鈥淐onsolidation of vendors leaves shortages of materials as you only have one vendor.鈥�
鈥淣ot a problem for our business.鈥�
鈥渊ou know, when I was a young man I had the mistaken impression that life would be easier as I got older and (hopefully) wiser. I now know that it doesn鈥檛 get easier and each day will have its own unique challenges. Once you reach the top of one hill you find another, more challenging hill ahead. My advice to this dealer would be to embrace the challenge and, eventually, find the solution that makes your company not only as strong/competitive/efficient as before, but better. There are a good many wholesaler/distributors out there. A new one may be the solution to this predicament.鈥�
鈥渊ou and your competitors are all in the same boat, it鈥檚 a level playing field out there, you just have to work harder to maintain and grow your business.鈥�
Responses from wholesale distributors, manufacturers, and service providers:
鈥淲e have had to do many face-to-face meetings with the management team and still haven鈥檛 seen an improvement. The local management understands the challenge, but their upper management doesn鈥檛 seem capable of action.鈥�
鈥淭he communication issues could be coming with changes in personnel. The new ownership needs to be more proactive to keep the business (customers) that just came with the acquisition.鈥�
鈥淗onest communication.鈥�
鈥淐onsolidated companies are mostly concerned with inventory turns and improving return on investment. It is difficult to transfer that mindset to better customer service with a more diversified inventory.鈥�
鈥淎s a stand-alone, family-owned distributor, we have gained momentum from surrounding competitors being gobbled up and seemingly lost their focus after being brought into a larger business entity with investors to please. My suggestion would be to search for independent customer focused distributors鈥攖rust me, we are out there!鈥�
鈥淲e are seeing the same issues and have been forced to locate other suppliers who can provide the quality service we expect.鈥�
鈥淐ompanies get acquired and then all of the systems need to be migrated together or they operate different systems which makes things challenging. The true issue is that companies get so big that they stop focusing on the customer and service and look at data only.鈥�
鈥淗yper communication and focus is the only way to stay on top of this.鈥�
鈥淲holesale distributors should not be having communication issues, or inventory issues, at this time. The industry is down from peak volumes at the distributor-level, and customer service should be excellent. I would recommend scanning the market for other suppliers that are ready to be responsive and help you succeed in the market.鈥�
鈥淚t is a must to have quality current purchase history reports. As a rule, we recommend to keep a 60-day supply of A items on-hand, and a 30-day supply for B-D items.鈥�
鈥淪upply chain issues do not exist as of now.鈥�
鈥淲e are also seeing communication and service drop significantly. It鈥檚 as if the acquiring company doesn鈥檛 care about current relationships. 鈥楾his is how we do things now,鈥� seems to be the response to problems. We鈥檙e seeing billing problems with invoices not matching purchase orders. Our team is spending hours trying to figure out what the 鈥榥ew鈥� vendor is doing. It鈥檚 very frustrating. Likely our team will look for another vendor to meet our needs, which is sad as we鈥檝e had this relationship for over 20 years.鈥�
鈥淭hey seem to have decided that their overhead is now our overhead.鈥�
鈥淣ot yet. Since Covid-19, most vinyl and wood window manufacturers added 30%+ production volume. When interest rates start to come down, supply issues will become a factor in the window supply chain.鈥�
鈥�Look for other鈥攑ossibly smaller鈥攕ervice-focused partners. Large conglomerates that perform well are rare.鈥�
Has consolidation among vendors impacted communication or inventory and supply-chain issues for your company?
Responses from dealers:
鈥淢y truss supplier was bought by a corporate overlord and has slowly become more expensive and slower in their process, quoting, and shipping. My sales rep has also changed. Anytime I have an issue, I end up contacting my former sales rep who is still with the company to fix it.鈥�
鈥淧ost-acquisition nightmares with AP and then quality.鈥�
鈥淲e had a nationwide distributor recently purchase a local family-run competitor of theirs and became the sole distributor for the product line I purchase. Now I don鈥檛 have any other option to buy the product from, which has made things rather difficult.鈥�
鈥淐onsolidation or relocation may help suppliers bottom line but rarely improves service.鈥�
鈥淐ompetition keeps vendors sharp. Need at least a dual supplier model.鈥�
鈥淲e haven鈥檛 noticed any communication issues yet.鈥�
鈥淲e have seen some vendor consolidation, so far it has not negatively impacted our business significantly. However, we also have not experienced the advantages that the vendors have advertised.鈥�
鈥淭oo frequently supply chain disruptions with large manufacturers are going 鈥榦ff market.鈥欌��
鈥淭his is a loaded question鈥攄ealing with multiple vendors and products has been better with some and worse with others.鈥�
鈥淢any of the better vendors are seeming to get swallowed up by not-so-great vendors. Less choices means less competition, means higher prices and worse service. It鈥檚 sad.鈥�
鈥淭he more 鈥榗orporate鈥� they are, the harder they are to deal with.鈥�
鈥淓very time we have experienced a merger, prices seem to go up, customer service and quality go down.鈥�
鈥淲e are a very small business and as they get bigger, we get smaller.鈥�
Responses from vendors:
鈥淚nteractions like billing and payments are automated.鈥�
鈥淲e as distributors have not had any issues with consolidation. With that said, I do see the effects from some of our dealers which has strengthened our position with them.鈥�
鈥淣ew owners don鈥檛 care about customers鈥� needs. Old owners (who are staying on during the transition) don鈥檛 have any control to fix problems.鈥�
鈥淎s a wholesale distributor, the manufacturers that we work with have had steady ownership.鈥�
鈥淭he historical lines of doing business, manufacturer, two-step distribution, and end user has blurred quite dramatically the past few years. We find that a few of our partner mills that we have done business with for the past 40 years and have basically taught them the business in our local market are now going to business through competing channels, and we have seen our sales drop with a few vendors by 65% or more. These same vendors would be our last resort for purchasing products from and are now more competitors than suppliers.鈥�
鈥淭he consolidation of quarries with a top heavy management team has delayed product, caused confusion as to what they will be quarrying and caused issues with product availability. The management team seem to be numbers people that really don鈥檛 understand the true business.鈥�
鈥淚f something goes wrong, you have to ask your buyer or salesperson to intervene. Too many times and they see you as a problem customer or supplier.鈥�
鈥淎 smaller company with specialty parts was acquired by a larger corporation, and the service level as well as order fulfillment was greatly impacted.鈥�
鈥淲e鈥檙e losing sense of urgency and missing the relationship aspect that are important in this industry.鈥�
