how distributors of engineering products select suppliers

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Engineering Management International, 4 ( 1987) 227-237 Elsevier Science Publishers B.V., Amsterdam - Printed in The Netherlands 227 NGINEERING P SELECT SUPPLIERS David Shipley and Smil Prinja University of Bradford Management Centre, Emm Lane, Bradford, West Yorkshire BD9 4JL, Great Britain ABSTRACT Environmental developments are causing engineering companies to become more depend- ent on distributors for efficient and effective dis- tribution. However, knowledge of these miiddlemen and how to gain their patronage is insufficient. This research contribu,tes to the body of knowledge in this area through a discussion of findings from a recent survey of British distrib- utors of engineering products. There is an exam- ination of the services performed by these middlemen and of their characteristics. The benefits and drawbacks of marketing with dis- tributors are outlined. As guidance for maiiufac- turers of engineering products t-hatare or may be seeking distributors, there is a detaiZed dis- cussion of their supplier choice criteria. Impli- cations and recommendations for producers are provided while throughout the paper mancfac- turers are encourage& to form inform& distri- bution partnerships tijith their distributors. INTRODUCTION Effective distribution can be a powerful com- petitive advantage for many engineering com- panies. A vital ingredient of efficient and productive distribution is the development and maintenance of effective distribution channels. For many firms such channels run directly from the producer to the customer without the involvement of intermediaries. Duria Q recent years, however, large numbers of companies, faced with rising selling costs, intense compe- tition, growing customer service demands and other developments, have become far more reliant on industrial distributors ( Price, 1983; Narus and Anderso:l, 1986). These are small, independently ownesd businesses that enhance distribution performance by buying products from manufacturers, contar ting and reselling them to industrial users anci performing a range of valuable services for t!,em. The main attrac- tion of these middleme.: from the manufactur- er’s perspective is t!xt they can help to lower distribution costs, Lxrease sales and, by creat- ing greater customer satisfaction, achieve long- term customer loyalty (Shipley, 1984). Despite t.hcir considerable and growing importance, however, relatively little is known about industrial distributors, and manufactur- ers need to learn more about them and about how to achieve productive relationships with them. A particular information need, given the trend toward increased use of distributors, is how can effective middlemen be attracted? After all, distributors, like all types of busi- nesses, vary in capabilit.ies and performance so 0 167-54 19/87/$03.50 0 1987 Elsevicr Science Publishers B.V.

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Page 1: How distributors of engineering products select suppliers

Engineering Management International, 4 ( 1987) 227-237 Elsevier Science Publishers B.V., Amsterdam - Printed in The Netherlands

227

NGINEERING P SELECT SUPPLIERS

David Shipley and Smil Prinja

University of Bradford Management Centre, Emm Lane, Bradford, West Yorkshire BD9 4JL, Great Britain

ABSTRACT

Environmental developments are causing engineering companies to become more depend- ent on distributors for efficient and effective dis- tribution. However, knowledge of these miiddlemen and how to gain their patronage is insufficient. This research contribu,tes to the body of knowledge in this area through a discussion of findings from a recent survey of British distrib- utors of engineering products. There is an exam- ination of the services performed by these

middlemen and of their characteristics. The benefits and drawbacks of marketing with dis- tributors are outlined. As guidance for maiiufac- turers of engineering products t-hat are or may be seeking distributors, there is a detaiZed dis- cussion of their supplier choice criteria. Impli- cations and recommendations for producers are provided while throughout the paper mancfac- turers are encourage& to form inform& distri- bution partnerships tijith their distributors.

INTRODUCTION

Effective distribution can be a powerful com- petitive advantage for many engineering com- panies. A vital ingredient of efficient and productive distribution is the development and maintenance of effective distribution channels. For many firms such channels run directly from the producer to the customer without the involvement of intermediaries. Duria Q recent years, however, large numbers of companies, faced with rising selling costs, intense compe- tition, growing customer service demands and other developments, have become far more reliant on industrial distributors ( Price, 1983; Narus and Anderso:l, 1986). These are small, independently ownesd businesses that enhance distribution performance by buying products

from manufacturers, contar ting and reselling them to industrial users anci performing a range of valuable services for t!,em. The main attrac- tion of these middleme.: from the manufactur- er’s perspective is t!xt they can help to lower distribution costs, Lxrease sales and, by creat- ing greater customer satisfaction, achieve long- term customer loyalty (Shipley, 1984).

Despite t.hcir considerable and growing importance, however, relatively little is known about industrial distributors, and manufactur- ers need to learn more about them and about how to achieve productive relationships with them. A particular information need, given the trend toward increased use of distributors, is how can effective middlemen be attracted? After all, distributors, like all types of busi- nesses, vary in capabilit.ies and performance so

0 167-54 19/87/$03.50 0 1987 Elsevicr Science Publishers B.V.

Page 2: How distributors of engineering products select suppliers

that producers need to know how to identify the most effective middlemen and how to gain their patronage.

The purposes of this paper are to argue the advant,ages of adopting a “partnership” approach in the management of distribution intermediaries and to report findings from a survey of British distributors of engineering products, The following section contains a dis- cussion of the partnership concept, reasons for its importance and some background discus- sion relating to distributor’s choice of suppliers. There is then a short section to describe the research methodology and a longer section con- taining the results and discussion. The findings are in three categories. The first group describes the numerous services performed by engineers’ distributors, thereby indicating some of the benefits of using t,hem. The second set of find- ings relates to various characteristics of engi- neers’ middlemen and so provides a better understanding of them. The third group of results identifies supplier selection criteria applied by distributors of engineering products, indicating how producers of such goods can gain their patronage. The final section of the paper offers conclusions and addresses the manage- rial implications.

PERSPECTIVE

Marketers generally consider that effective distribution channel management is best facil- itated through the implementation of informal partnership arrangements between producers and distributors ( Webster, 1976; Hlavacek and McQuiston, 1983; Shipley, 1987) Such arrangements are formed when the two parties recognise that their respective performances are at least partly interdependent Stern

( Corey, 1983 ) .

) . Conversely,

a given a single

a matter

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229

industrial distributors’ supplier selection cri- teria, producers might be tempted to seek guid- ance from results on this topic that relate to distributors of consumer products (Brown and Purwar, 1980; McGoldrick and Douglas, 1983; Shipley, 1985). However, altnough there are some similarities as between industrial and consumer goods distributors there are really too many important differences for these findings to be of little more than marginal usefulness in the current context.

Of more use are the results of studies of the supplier selection determinants of industrial customers (Lehmann and O’Shaugnessy, 1974; Cameron and Shipley, 1985; Abratt, 1986; Kas- sicieh and Rogers, 1986 ) . Seen differently, these are the supplier patronage criteria of industrial distributors’ own customers which middlemen must be able to provide in order to carry out their own principal function which is selling. In the current context, the supplier choice criteria applied by industrial users of engineering prod- ucts are typified by those found in an earlier study (Shipley, 1982) and presented here in Table 1. There is some variation among these findings, particularly by the type of product purchased. Nevertheless, it is clear that attri- butes such as product quality, price, delivery, after-sales services, product maintenance con- ditiJns etc. are widely prevalent sourcing deter- minants among buyers of engineering products. It seems equally clear t.hat such attributes will also be among the supplier selection criteria of engineering products distributors since their failure to procure them will preclude or make very difficult the resale of their purchases.

However, these broadly-defined product attributes are by no means the only producer choice influences of industrial distributors. The characteristics and circumstances of these mid- dlemen enable them to benefit greatly from the planning and operational co-ordination as well as the material assistance provided by produc- ers when a distribution partnership arrange- ment is formed. Therefore, since in most markets there are multiple producers able to provide an adequate mix of the product attri-

butes required by distributors and their cus- tomers (Cameron and Shipley, 1985)) their

supplier choices can be influenced toward the manufacturers that also offer the most attrac- tive channel relationships. This proposition is

supported in the following discussion. Industrial distributors are neither owned nor

controlled by the manufacturers whose prod- ucts they rrandle (Webster, 1976; Rosenbloom, 1978; Stern and El Ansary, 1982). This inde- pendence means that middlemen are free to choose their own lines of business, suppliers and ways of doing business. However, as noted, although independent in terms of ownership, distributors and their suppliers are interdepen- dent in terms of performance. Hence, co-ordi- nation is required to minimise conflict and maximise performance. Conflict can arise because producers and resellers have different and often conflicting needs, philosophies, objectives and strategies (Webster, 1976; Etgar, 1979). Effective communication is an impor- tant means for keeping the two parties informed of each others’ way of thinking and, therefore, of lowering the risk of conflict.

A further benefit of communication is that it enables producers to motivate middlemen by assuring them that they are appreciated (Rosenbloom, 1978) and by assuring them of a long-term business relatianship ( Sibley and Teas, 1979). This latt.er is important given the long-term resource commitment needed from both parties in an effective distribution link. The most powerful communication benefit, however, is that it facilitates co-ordinated plan- ning and complementary operations which are perhaps the most critical determinants and the clearest indications of arl effective partnership. Effective planning and co.ordination, however, relies on more than just communication. It also requires the willingness of both parties to listen to each others’ views and to actively participate in integrat,ed planning and operations. Thus, it is proposed that distributors’ supplier selection criteria will include a group of variables includ- ing producers’ communication, assurances, receptiveness to advice and joint planning com-

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TABLE 1

Supplier selection criteria of industrial users of engineering products (Shipley, 1982 1

Percentage of respondents

Users’ industry:

Type of purchase:

Product quality Price After-sales service Reliable delivery Ease of product maintenance Prompt delivery Prompt sales quote Credit terms Meets proluct specifications Product. range Sales representation Advertising Sales promotion Packaging

Mechanical engineering Electrical engineering”

Machinery Components Machinery Components N=51 N=55 N=39 N=44

92 91 97 95 84 93 85 98 82 53 90 39 76 84 72 93 67 31 77 20 53 65 64 77 47 6s 62 66 41 29 28 34 27 47 31 57 20 25 1s 23 18 13 23 30 8 7 15 16 8 4 8 5 4 4 3 7

mitment. These may be termed channel rela- tionship influences.

Another major issue in industrial charm?1 management is that distributors are usually small firms (Webster, 1975; Narus et al., 1984; Shipley, 1987 ) . Small firms tend to face various constraints that do not affect larger companies (Tate et al., 1985). Prominent among such constraints are some that relate directly to marketing and which thus have major signifi- cance for industrial distributors whose primary activity is marketing. Carson (1985) has described three marketing constraint,s of small businesses as limited market impact, limited resources and lack of specialist talent. Limited market impact is a problem as it means the ben- efits of large market share are foregone. How- ever, the other two constraints are more relevant here since they bear directly on dis- tributors’ choice of supplier. Limited resources are a marketing problem as they constrain mid- dlemen’s abilities to build market data or large stocks and to extend generous credit or incur heavy promotional expenditures etc. Lack of

specialist expertise is itself a partial function of limited resources. Distributors cannot afford specialist staff and instead make use of mana- gerial generalists, among whom at least one of the firm’s owners is usually inciuded (Webster, 1975). Consequently, industrial middlemen lack specialist talent in marketing and other key functions such as purchasing, personnel and finance.

These resource problems ti; much less marked among many or most producers of engi- neering products on account of their larger size. It follows that manufacturers can enhance overall channel performance, and so that of all the channel participants, by providing support to compensate for the distributors’ smallness- induced weaknesses. In turn, it follows that dis- tributors’ patronage decisions are influenced positively by manufacturers that provide advertising and other marketing support, training of intermediaries’ staff, market infor- mation and SQ on.

The foregoing discussion suggests that the supplier choice influences of engineers’ distrib-

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utors are of three broad types: e Basic economic criteria such as product

quality, price, delivery, etc. demanded by distributors’ customers.

o Channel relationship criteria required for communication and integrated planning and operations between producers and middlemen.

e Distributor support criteria comprising producers’ aid to overcome distributors’ marketing and management weaknesses.

The results section below examines and con- firms the existence of these three categories of manufacturer selection determinants.

THE SURVEY AND THE SAMPLE

The data were collected in a 1986 mail sam- ple survey conducted in Britain. Question- naires were sent to the top managers of engineering products distributors hated in the 1986 KOMBASS register and the 1985 Kelly’s Manufacturers’ and Merchants’ Directory. The purpose of the survey was to acquire informa- tion leading to a better understanding of these firms’ characteristics, services and manor :e- ment practices. The questionnaire was pre- tested for ambiguity and other problems and some amendments were made. The final ver- sion consisted of 11 sides of paper containing an explanatory letter of int.roduction and 16 questions seeking a total of 153 pieces of data. The respondents were offered anonymity plus a copy of the results if subsequently asked for. They were also provided with a pre-paid reply envelope.

A total of 175 questionnaires were sent out, producing 48 usable responses and an effective response rate of 27.4%. This was viewed as rea- sonable and acceptable given the lengthy ques- tionnaire, its sensitivity and the lack of any other mail-out or contact with the respondents. All of the respondent firms were distributors primarily of engineers’ outputs, although the nature of their self-defined main products var- ied by engineering product types. A breakdown

TABLE 2

Respondents by position and main products

Respondents ( % )

N=48

Position of respondents Managing director 35.4 Director 43.8 General manager 12.5 Other 8.3

Main products of respondent firms Hydraulic and pneumatic equipment 16.7 Gears, clutches, brakes, etc. 12.5 Fasteners 10.4 Machinery components 10.4 Machine tools 8.3 Power transmission equipment 8.3 Bearings 8.3 Clocks, gauges, etc. 8.3 Hand tools 6.3 Semiconductors, circuits, etc. 6.3 Power tools 4.2

of these main products is shown in Table 2 along with information about the job positions of the respondents. More detail on the characteristics of the respondents’ firms is presented and dis- cussed in the following section.

This section progresses through three sub- sections. These relate respectively to the serv- ices provided by distributors of engineering products, their characteristics and their sup- plier choice determina.nts.

Distributors’ customer services

Table 3 presents findings on the prevalence of 15 customer services carried out by the respondent firms. Making products available to customers, delivery, easy contact and an attrac- tive product assortment are predictably very widespread services offered. These are also, of course, among the most fundamental and

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TABLE 3

Customer services provided by engineers’ distributors

Percentage of respondents N=48

Product availability 100.0

Delivery 95.8

Technical advice 93.8

Easy contact 91.7 Information provisiun 72.9

Attractive product range/assortment 70.8 Product demonstration 64.6 Product replacement 52.1 Product maintenance/servicing 47.9 Breaking bulk into smaller units 47.9 Extended credit (beyond one month) 27.1 Packaging 18.8 Leasing 12.5 Grading 10.4 Blending 2.1

important of all di:;tribution tasks. Other com- monly reported services are the three con- nected ones of providing technical advice, product demonstration and (other) informa- tion. These services are particularly important and helpful to customers of the many techno- logically complex products such as those shown in Table 2 to be among the product assortments of many of the current sample. Product main- tenance and product replacement are also com- monly performed services, again being particularly important to users of high-tech goods. The provision of extended credit and leasing facilities reflects the high unit value of many engineering products and they represent considerable benefits to the customers con- cerr.cd. The same is true of the breaking bulk service which has major import for smaller cus- tomers and other firms with short production runs. The three remaining services, packaging, grading and blending are common services in other industries, although the nature of many engineering goods largely removes the need for them to be performed by engineers’ middlemen.

Engineers’ distributors also, of course, pro- vide important services for the manufacturers

with which they enter into distribution rela- tionships. These services were not specifically covered in this survey but to avoid reference to them in the current context would be neglect- ful. The most vital of the distributors’ manu- facturer services are contacting customers, selling, delivery and market development. in addition, they carry out repair work, before- sales services, warehousing, product assembly, and information gathering while some of the customer services displayed in Table 3 are also demonstrably direct services for producers as well as customers.

In sum, engineers’ distributors perform many valuable services for their suppliers and their suppliers’ ultimate customers. These services can substantial.‘Ly enhance the marketing per- formance of producers and they represent good reasons why many engineering companies can benefit substantially by developing an effective distributor network.

Some characteristics of engineers’ distributors

Without being exhaustive, the characteris- tics of the engineers’ distributor shown in Table 4 are instructive. The first two groups of results respectively show that by size of workforce and size of annual turnover these firms typically are small. Indeed, over 80% of them employ fewer than 50 persons while about 80% of the sample firms each turns over less than g3 million annually. These results accord with previous findings for industrial distributors in both the U.K. (Shipley, 1987) and the U.S.A. (Webster, 1975; Narus et al., 1984). As noted earlier, this smallness poses major problems for distribu- tors and major implications for their suppliers.

Ii1 contrast to their small size, it is shown in Table 4 that a large proportion of the distribu- tors handle a broad range of product lines and that the majority of them trade with a large number of regular cust,omers. Some 60% of the sample serve over 200 such customers while

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TABLE 4

A profile of engineers’ distributors

Percentage of respondents N=48

Number of employees 1 to 4 5 to 9

IO to 24 25 to 49 50 to 149

150 or more Annual sales turnover ( EOOOs)

oto49 50 to 99

100 to 499 500 to 999

1000 to 2999 3000 or more No response Number of product lines

1 to 4 5 to 9

10 to 24 25 to 49 50 or more No response Number of regular customers

1 to 49 50 to 199

200 or more Carry competitive lines ‘Yes No Primary obligation and loyalty given to Customers Suppliers

22.0 18.8 18.8 22.9

‘0 .

1z.i

0.0 10.4 29.2 16.7 20.8 16.7 6.3

10.4 12.5 18.8 6.3

47.9 4.2

16.7 25.0 58.3

77.1 22.9

93.8 6.3

resources to serving their individual suppliers as those suppliers may consider satisfactory, or even reasonable. This is clearly a potentially very strong cause of major channel conflict.

Potential major conflict is also evident in the nearly 80% of respondents which Table 4 shows to be carrying competitive lines. This practice gives middlemen some insurance against sup- ply disruptions and it gives them some product and price variety. However, carrying competi- tors’ products is bound to antagonise suppliers and especially those that have invested consid- erable resources in nurturing the middleman’s growth and/or developing the channel link (Webster, 1976; Shipley, 1984).

These kinds of findings suggest that many engineers’ distributors give their suppliers less commitment than is justified in an equitable channel partnership. This suggestion is, at first sight, further underlined by the finding in Table 4 that 94% of the intermediaries attach their prime obligations and loyalty to customers rather than suppliers. However, producers should not be overly concerned about the dis- tributors’ relative loyalties. Rather, they should perceive them as an indication of distributors’ marketing orientation t.o doing business which serves the best interests of customers, produc- ers and middlemen alike. Instead of chastising distributors for their customer orientation, it would be better for producers to take steps to encourage their intermediaries to develop a strong supplier loyalty and commitment as well.

about 50% of the middlemen carry more than 50 product lines.

It appears, therefore, that the scope of engi- neers’ di.stributors’ operations is greater than their small size might infer. This is not, how- ever, without certain important consequences. The distributors’ considerable cust,omer and product diversity may well mean that, given their small workforce and turnovers, many of these firms are over-dependent on small t*rans- actions. For the same reasons, they may also be unable to allocate as much of their time and

Engineers’ distributors’ supplier choice criteria

In the second section, it was proposed that the distributor’s sourcing determinants would consist of three groups of influences. These were: basic economic criteria needed to satisfy customer demands; channel relationship crit.e- ria; and distributor support crit’eria.

To test this proposition t.he respondents were asked to evaluate a list of factors and to “indi- cate the extent to which each influences your decision to distribute on behalf of a particular

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producer rather than his competitors”. Respondents were asked to indicate their responses by rating each factor on a five-point scale ranging from “one represents not an influence” to “five represents a very strong influence”. The list of potential influences wss

assembled following a study of the industrial distribution-channel literature and literature relating to the supplier choice determinants oc both indust,ria! users and consumer goods dis- tributors. The list was not considered to be exhaustive owing to the need for limitation on the number of variables examined. Rather, the real purpose was to identify the types of vari- ables that determine distributors’ manufac- turer selection.

The response is presented in Table 5. This shows the frequency with which each criterion was specified ( rated above one on the scale) and it shows the mean influence on the scale. The rank order of variables was based on mean influence. The results do confirm the threefold categorisation of supplier choice criteria pos- tulated above and the data are presented in those three groupings.

A striking feature of Table 5 is the high fre- quencies attaching to most of the variables. These exceed 75% for the vast majority of fac- tors while most of the criteria also achieved high mean influence scores. The most influential group of variables is shown to be that consisting of basic economic criteria. This was predictable since the producer’s product offering is what the distributor buys and tries to resell, along with added services, to the customer. Therefore, problems with the manufacturer’s offering may well prevent the middleman from performing his own role. Quite simply, producers must sup- ply to the middleman what cust30mers want him to supply to them. In line with this, it is notable that all of the distributors’ basic economic influences shown in Table 5 are among those shown as major choice criteria of customers for engineering products in Table 1. The impor- tance of this group of distributor’s sourcing cri- teria is emphasised by the finding that it includes four of the top five ranked fact.ors,

while all of the others have high frequencies and mean influence scores. By demonstrating his endeavours to procure product attributes that match his customer’s needs, these results add support to the inference made earlier that the engineer’s distributor adopts a strong market- ing orientation. Yet more support for this exists in the response to the variable termed prices, discounts, commissions, etc. The respondents show +h ic t,, hn c, ~~,;&l~r r\nnxrnlnn+ nrrJ h:eLl.v . “I..” V” ut/ u r*rubAy prtd v UAbAAL/ ULlU Lrl~lrily

influential criterion but they also show they believe that business and marketing success is determined also, and in this case more so, by non-price factors.

The group of variables labelled channel rela- tionship criteria indicate the distributors strong need for manufacturers to provide or contrib- ute to a harmonious, communicative, inte- grated partnership. The critical requirements for integrated planning and effective commu- nication from and/or with the producer are evi- dent in the variables ranked sixth, seventh, eighth, fourteenth and twenty first. The remaining and related factor in this group is the producer’s assurance of his long-term commit- ment to the channel relationship. This was shown to be a very important motivator of industrial agents ( Sibley and Teas, 1979) and without such assurance, middlemen are likely to be very nervous about committing their own resources heavily.

The various distributor support variables achieve mainly middle and lower order rank- ings. Nevertheless, they are still very common and influential factors. Most of these variables relate t.o different forms of marketing support. Ranked fourth and ninth are the producer’s image and well known products, both of which can be highly beneficial to middlemen lacking marketing funds. The distributor’s marketing is also enhanced by manufacturers’ efficient sales quotations and provision of information about market research and products. Similarly and obviously, his marketing is also enhanced by producers’ advertising and sales promotion, while he also benefits much from the manufac- turer’s training of his salesforce. Distributors’

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TABLE 5

Influences on engineers’ distributors’ choice of supplier

Percentage frequency N=45”

Mean influence”

Rank

by mean

Basic Economic Influences Quality of products Quality of delivery service Range of products Products superior to competitors Product replacement service Prices, discounts, commissions, etc. Credit terms Produce maintenance/servicing conditions

Channd Relationshq Influences Regular communication with you Quality of working relationship Receptive to complaints and advice Long term business commitment assurance Regular personal contact with you Involves you in his planning

Distributor Support Influences Producers’ image Weii known products/brands Product information service Saies quotation service Adv&sing/promotion support Management training/support/advice Salesfrlrze training/support Market research information service Attractive loans

97.9 4.51 1 97.9 4.28 2 93.6 3.89 3 87.2 3.81 5 84.8 3.54 10 78.7 3.23 15 70.2 2.70 17 67.4 2.61 19

100.0 3.79 6 97.8 3.78 7

lOO.iI 3.77 8 77.2 3.45 13 91.5 3.34 14 65.2 2.33 21

91.5 3.83 4 87.2 3.64 9 93.6 3.49 11 89.4 3.47 12

83.0 3.15 16

68.1 2.64 18

72.3 2.53 20

56.5 2.09 22

30.4 1.57 23

“Except for 6 variables where N = 46. “Based on a 5-point interval scale ranging from 1 (not an influence) to 5 (a very strong influence ).

smallness-induced management deficiencies age of research means that too little is known discussed earlier are partly offset by the pro- about these middlemen, the services they pro- ducer’s provision of management training and vide and their management practices. This advice. Finally, some middlemen encounter paper has tried to provide further insights problems in obtaining expansion finance and through the presentation and analysis of find- their patronage can be encouraged by produc- ings from a recent survey of British distributors ers able to provide them with attractive loans. of engineering products.

CONCLUSIONS, IMPLICATIONS AND RECOMMENDATIONS

Manufacturers are relying increasingly on industrial distributors. Yet the relative short-

The first set of findings discussed shows that producers of engmeering products can benefit much by obtaining the services offered by dis- tributors. These services are channel functions such as making products available, delivery, information provision, product demonstration and after-sales services which manufacturers

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themselves have to carry out if distributors are not used. As specialists in performing these tasks, middlemen can often improve distribu- tion efficiency and increase customer satisfac- tion to the ativantage of all parties. In addition to their customer services, distributors also offer producers the major benefits of comprehensive market coverage, expert market and product knowledge, customer contact, selling, informa- tion feedback and other advantages. These can ‘;sc- powerful reasons for engineering companies TV adopt a system of marketing through distributors.

On the negative side, however, engineering products distributors are shown to be small firms which, it is suggested, may be over- stretched by the large number of regular cus- tomers they serve with a large number of prod- uct lines. This might mean that distributors are too heavily dependent on numerous small orders. More importantly from a manufactur- er’s perspective though, it can also mean that he is allocated too little of a distributor’s resources. The probability of this is raised by the finding that most engineers’ distributors carry the product lines of competing producers which is a problem pari;icularly resented by manufacturers that have invested heavily in the development of a distributor. It is found also that distributors attach more of their commit- ment and loyalty t,o customers than to sup- pliers. This does suggest a marketing orientation that can be advantageous to all par- ties although it might equally lead to some con- flict among producers and their middlemen. Finally, among the disadvantages, it is noted that distributors’ smallness causes them to have certain characteristic weaknesses. These include lack of management depth and speci- ah&ion with the specific major problem of serious marketing-resource deficiencies.

It is argued that many of these real and potential problems of using distributors can be alleviated or removed through the formation of harmonious cczmunicative, integrated chan- nel partnerships. These can build dealers’ enthusiasm for and commitment to a manufac-

turer, thereby helping to redress the unsatisfac- tory resource allocations of which many engineers’ middlemen may be guilty. Even within a partnership, however, producers may have to make special endeavours to motivate distributors in order to build the levels of their commitment to those they give to their cus- tomers. Other benefits of the partnership approach are more clear-cut and more certain. Partnership facilitates effective two-way com- munication. It reduces the scope for channel conflict. It enables co-ordinated planning and operations and it allows the two partners to counteract each others’ weaknesses.

The findings indicate that distributors’ sup- plier choice criteria consist of three sets. If pro- ducers of engineering products want to gain the patronage of satisfactory distribut.ors, they must supply a product offering containing the attri- butes necessary to satisfy distributors’ cus- tomers; they must provide appealing channel relationship conditions; and they must offer support, especially marketing support, to offset distributors’ weaknesses. Channel partnership provides the ideal climate for ensuring the identification and satisfaction of distributors’ patronage determinants. To obtain these ben- efits and all of the other advantages that part- nership offers both parties, manufacturers are recommended unreservedly to adopt a partner- ship approach in their distribution channel management.

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Brown, J.R. and Purwar. P.C., 1980. A cross-channel com- parison of retail supplier selection factors. In: H.P. Bagozzi (Ed.), Marketing in the Eighties. American Marketing Association, Chicago, IL.

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