Wholesalers: Chain of Demand

The call came in at 3 p.m. A customer of Kew Forest Maintenance Supply in Forest Hills, N.Y., needed 30 dozen mops in the next 24 hours. The order greatly exceeded the distributor’s inventory, but CEO Jerome Blumberg promised to make good on the request.

Blumberg hung up the phone and crossed his fingers, hoping that he could come through with the goods. Much to his relief, Blumberg’s wholesaler guaranteed that the mops would be in the customer’s hands by the next morning.

The wholesaler came through in a pinch, helping Kew Forest impress its customer — one that had been one of the distributor’s larger accounts for many years, and one he didn’t want to risk losing. But Blumberg says his wholesaler has helped him satisfy the needs of many customers, large and small.

“I don’t like to lose a customer, so we do what we need to do to keep them,” Blumberg says. “That’s how you make little customers into big customers.”

For distributors like Kew Forest, wholesalers are an indispensable link in the supply chain. They support distributors by filling last-minute orders, warehousing ancillary items, and bridging the gap between regular manufacturer orders.

Just-in-time Delivery
Kew Forest buys direct from manufacturers for most of its needs. Getting these products, however, can take a week or more, so the distributor turns to its wholesaler, or redistributor, for urgent orders.

When a customer requests an out-of-stock item, distributors are faced with a choice: wait for the item to ship from the manufacturer, or call a local wholesaler for quicker turnaround. This happens frequently at Erzen Associates, a distributor in Monroeville, Pa.

“If we aren’t able to get it to [customers], they will go elsewhere,” says Christine Spila, business manager for Erzen. “But because we are able to get it through a wholesaler and get it to them it quickly, it saves that threat of losing someone as a customer.”

Wholesalers are also important to smaller distributors whose annual sales preclude them from buying direct from manufacturers. WinPro Solutions, Lenexa, Kan., is nearing a day when it can buy direct, but in the meantime it relies on its relationships with wholesalers to satisfy customer demands.

“I think [wholesalers] are essential,” says WinPro’s president, Hal Kurz. “The majority of distributors are smaller, like myself, and need a wholesaler. It enables them to expand their stock and what they can offer to a customer.”

Warehouse Woes
Very few distributors have enough warehouse space to accommodate every item a customer may need. Wholesalers, on the other hand, have much larger storage facilities that can house large quantities of practically every tool or chemical.

In its 10,000-square-foot building, Erzen Associates stocks a little bit of everything. The facility cannot, however, warehouse every item in every quantity customers may need. Ancillary items are particularly problematic.

For example, there are literally thousands of different floor pads a distributor could stock. There are pads for low- and high-speed machines, they come in dozens of diameters, and there are task-specific pads for everything from stripping to polishing. Likewise, stocking every type of mop and mop head (from antimicrobial to cotton loop) could take up an entire facility by itself.

“In this industry, there are just so many varieties of so many items that it’s almost impossible for a distributor, especially a small, local distributor, to carry it all,” Spila says.

WinPro Solutions’ Kurz agrees. “You try to be everything to everybody, but a lot of times, you can’t do that,” he says. For example, for WinPro to carry an entire window-washing line, it would have to order at least $2,000 of products (plus pre-paid freight) from a manufacturer and then find shelf space to store everything. Instead, WinPro relies on its wholesalers to make up for the lack of space and buying power. On more than one occasion, Kurz has ordered a single squeegee channel from his wholesaler.

“If a customer needs something you don’t carry, you can fill these orders and take care of the customer in a timely manner without having to say ‘no’ or turn them away,” Kurz says.

Price Points
Rising trucking costs have pushed manufacturers to raise minimum orders for freight, which has many distributors seeking more affordable alternatives for small orders. Wholesalers can easily meet manufacturer minimums by ordering truckloads of every item. Ordering in mass quantities nets them better pricing, which they can then pass on to distributors.

Recently, an Erzen Associates customer ordered five cases of a liner that the distributor didn’t have in stock. Spila called her regular plastics manufacturer and discovered the minimum order was 50 cases — it would take that customer nearly a year to use all those liners. Neither the customer nor Erzen had space to store the excess cases.

“For me to bring in a year’s supply is not smart,” Spila says. “It takes up a lot of space and the turn is very slow.” Instead, Spila ordered from a wholesaler, who was able to meet her pricing and quantity needs. Manufacturers think in terms of pallets, she says, while wholesalers are able to deal in cases.

A wholesaler’s buying power can also benefit a distributor that is going to bid or trying to win a big customer. A wholesaler can negotiate deviated pricing from the manufacturer and then cut the distributor a deal. The wholesaler is more likely to do this, of course, if the distributor is a regular and reliable customer.

“They all have deals where the more you buy from them, the less it is going to cost,” Kurz says. “If you do a lot of business with them, you’ll get a cheaper price.”

Just Friends
As with any relationship, developing a long-term partnership with a wholesaler takes time and patience.

“It’s just like a friend,” Spila says. “You don’t trust someone when you first meet them. Then, through the years, you develop a relationship. When there’s longevity there, you gain more trust.”

Erzen Associates has worked with its primary wholesaler longer than Spila has been with the company. She says the key to the duo’s success is the open dialogue between the two companies. The wholesaler returns calls in a timely manner, quickly confirms orders via fax or e-mail, and has come to Erzen’s rescue more times than Spila can count.

It’s wholesalers that go the extra mile that get WinPro’s business. The company may be small compared to other distributors, but Kurz expects to be treated like any other distributor. WinPro uses three wholesalers and most of them exceed ordinary expectations. They offer training to his sales force about the products they carry and they also accompany WinPro reps on customer visits to help them sell.

“I have some suppliers that won’t do anything for me,” Kurz says. “I have some that will bend over backwards for me, and those are the ones that I’m going to give my business to.”