For decades, the distributor/building service contractor interaction has been fairly simple– distributor sells, customer buys. But things change. Distributors are beginning to realize that BSCs can be very profitable and growth-oriented clients, and they are beginning to beef up their customer-service offerings and order-processing capabilities accordingly.

“BSCs are smarter about their purchases,” says Roger McFadden, vice president of Coastwide Laboratories in Portland, Ore. “They want to see value from the distributor that provides usage reports, online ordering and other information on the web; training programs; on-site repair capabilities; technical assistance; capabilities of providing an expert witness for litigation, and leads for new business. They want and require a partnership.”

“Distribution has changed in many ways in the last few years,” adds Tim Feeheley, president of JanPak Supply Solutions in Davidson, N.C.

One major change has been the use of technology.

“[Distributors now use] technology as a competitive weapon to allow customers to access information in almost any way they choose,” Feeheley says.

Online innovation
To that end, many distributors are upgrading their computer systems to provide stronger services.

“We are doing a number of things to expand customer service in the coming months,” Feeheley says. This includes expanding JanPak’s customer reporting and information system to allow for more flexibility, including expanded on-line suggested orders and approved-items-only cataloging; past upgrades already allow online order entry and order status, customizable transaction reporting and online invoicing.

“We’ve customized our computers in order to give better information to the building service contractor,” adds Paul Passanise, president of Royal Papers Inc. in St. Louis “We keep maintenance records, so we can tell him how much money he’s put into a piece of equipment, and help him decide whether it’s time to replace it.”

Small contractors, too, are starting to see the benefits of high-tech distribution, as well, says Mark Dancer, vice president and principal of Philadelphia-based Pembroke Consulting.

“Contractors are often small businesses and typically the last to adopt new buying practices and technologies,” says Dancer.

A forward-thinking distributor might change this dynamic by offering technology-enabled services that let small contractors move more quickly, Dancer adds. In other industries, distributors have taken the initiative with their small customers, and have provided them with technology such as wireless, barcode devices for managing inventory. Dancer says while this type of technology sharing is not happening yet in the cleaning industry, it could happen eventually.

Real-time needs
Wireless inventory is just one method distributors will be using in coming years to help their customers gain access to information immediately. Order and invoice processing is another.

“An effective distributor must be willing to share information with his or her ... customer on a real-time basis,” says Feeheley.

This includes setting up a system that lets the BSC order, receive, track orders, and receive and pay bills in a manner that the contractor wants, and that fits the BSC’s needs.

“In short, the distributor must be prepared to do what is necessary to simplify and mitigate a BSC’s back room/processing costs and ensure that the BSC’s labor force is productive,” Feeheley says.

But distributors aren't mind readers; BSCs need to keep their suppliers informed about their wants and needs, Feeheley adds.

“The most critical requirement for a BSC customer to help a distributor service them better is fast, accurate communication of changing business requirements,” he says. “The more the distributor knows about a BSC’s business, the better he or she can service them. Forward thinking BSCs understand that the BSC/distributor relationship must be based on a commitment to shared goals and values with open lines of communication; they must work together to keep costs down for both the BSC and the distributor.”

People for partnerships
Many distributors are increasing and training staff to help educate BSCs. Coastwide, for instance, is adding another chemist to assist in training, product development, problem solving — and even working with the BSCs’ customers to improve service throughout the supply chain.

JanPak also is training its staff to be even better partners to BSCs.

“[We’re] investing more time and dollars than ever in training our sales force on environmental regulation, disease control, appropriate channel specific cleaning applications and techniques, general problem identification and resolution skills,” Feeheley says.

Both distributors and contractors need to move beyond price and concentrate on value, adds David Champagne, president of Beacon Distributors Inc. in Lincoln, R.I.

“It comes down to finding the right value,” he says. “BSCs look at distributors as an expense, no tan asset. Contractors need to look long-term, not just at the immediate supply cost, to realize a great opportunity to benefit from the distributor’s expertise and know-how.”

Ask the experts
Every few years, supply-chain consulting firm Pembroke Consulting, Philadelphia, issues a report on the state of the distribution industry. In their new report, “Facing the Forces of Change,” they identify several trends that will impact distribution in coming years. These trends include increased online purchasing, a changing salesperson/customer relationship — and, something contractors probably won’t like, new fees.

Distributors are going to start paying attention to — and charging fees for — innovative service that directly reduce contractor’s costs or improve operations, says Mark Dancer, vice president and principal.

“Among cleaning contractors, labor costs are a primary concern. So ... services that aim to reduce their time spent on non-core activities such as procuring or handling chemicals, maintaining equipment, training, etc, will succeed,” Dancer says.

Customers will only pay a fee for services if there is a measurable and guaranteed return or clear benefit, Dancer says.

Self-service
While building service contractors might find themselves paying extra for certain services, they also may end up performing some sales functions themselves.

Distributors are beginning to target customers who may be interested in buying online, Dancer says.

“For example, helping contractors build ‘favorites’ lists is a simple step,” he says. Our ‘Facing the Forces of Change’ research report identified a trend we call ‘self service.’ If the distributor can help customers do some shopping and buying activities on their own, in a way that matches the customer’s preferences, it’s a win/win for both sides.”

The role of the salesperson also will continue to evolve.

“In the future, sales reps will become more consultative in ways that are practical and meaningful,” Dancer says.

When salespeople help contractors purchase via the Internet, they are reducing their customers’ need for in-person interaction. This reduces costs for the distributor, but still allows the BSC to make needed purchases in a timely manner.

E-mail communications with salespeople is on the rise as well, Dancer says. In some cases, wireless communications are a must, particularly when the customer wants to accelerate quote and bid processes.

“[But] telephone and fax won’t go away, so it’s complicated,” he says. “It’s hectic, because customers grow to expect instant access, all the time. At the start, distributors may be able to offer real-time communication methods to their best customers, but the trend will be for all customers to want the same benefits.”




POSTED ON: 6/1/2004