How Buying Groups Handle Distributor Service Areas

This is the third and final part of our roundtable discussion about buying groups.

Does joining the group as a member distributor automatically grant access to all of the member manufacturer product lines or do the member manufacturers have the right to choose not to accept a member distributor if the distributor’s service area already has plenty of other distributors in place?

For the most part, DPA membership would allow a distributor to buy from any of the group’s preferred manufacturers so long as the distributor can meet the minimum order requirement, which in many cases is greatly reduced per our DPA negotiated programs. However, there are some manufacturers that limit market competition due to their proprietary product dispensers such as hand soap and towel and tissue suppliers. This might make it difficult for a distributor to be set up if the vendor already has a loyal customer in that geographical area. Nevertheless, DPA membership will certainly give a distributor a much better chance of circumnavigating situations in which it was previously “blocked” from doing business. When you join a buying group, you will find that the rules are a little more lenient for you and that every consideration is extended, because you are becoming part of a much larger entity. — Zachary Haines, executive director, DPA Buying Group, Cincinnati

One of the strengths of the SMA organization has been the cultivation of stronger relationships between our member owners and qualified supplier partners. Again, harkening to our vision as a catalyst within the channel, SMA serves as an advocate for all stakeholders. In terms of member and manufacturer alliance building, when appropriate, we will intervene in an attempt to build alliances between our “Qualified Suppliers” and member owners, with great respect for what each party in this decision-making process has defined as the attributes worthy of a successful business partner. — Dick McGann, president and CEO, Strategic Market Alliance, Charlotte, North Carolina

There is nothing in place in any of our agreements that states a supplier has to sell to every member in every market. We understand that they have pre-existing relationships in certain markets. By the same token, we wouldn’t guarantee an exclusive contract to a supplier unless it could service every member in every market. This is why we have multiple suppliers within various product categories to ensure full coverage for the membership.

The United Group speaks with the voice of more than 400 members, which is considerably louder than the voice of one distributor. We regularly intercede on behalf of members with suppliers, and I think that manufacturers give more credibility to a buying group member than an individual business. — Bob Klief, vice president of marketing, The United Group, Monroe, Louisiana