Perhaps the biggest factor in a prosperous manufacturer/distributor relationship is communication. One could argue that with honest, open communication between both parties, a successful partnership will develop — a benefit to both parties involved.
Often, however, good communication gets lost in the shuffle of day-to-day tasks. Or maybe, the problem is that the manufacturer and distributors don't know how or what to communicate in order for it to be beneficial.
The HARDI Controls Council saw a need to try to remedy this problem by borrowing from other industries with a Vendor Review Tool.
This Vendor Review Tool came about from Controls Council Vice Chair Paul Neustadt with initial help from HARDI Vice President Talbot Gee. Over a several-month period, the Council reviewed and condensed the tool to its present form.
“This is a tool that's been used by other distributors in other markets before, but now it's been adapted specifically to the HVACR controls,” Gee says.
One way to look at the Vendor Review Tool is to think of it as a kind of vendor report card. However, as Gee warns, this does not mean that a wholesaler should view it negatively.
“The big issue is sifting through perception versus reality,” he says. “We're not talking about negligence or wrongdoing. People may perceive that some things work well or are well-liked. But that may not be the case.”
The Vendor Review Tool developed by the Controls Council asks vendors/suppliers to rate the overall quality in 13 categories:
- Culture, Philosophy and Communications
- Purchase Order Entry
- Scheduling and Expediting
- Shipping and Invoicing
- Pricing Policies
- Terms and Minimum Order Requirements
- Inventory Policies
- Product Warranty
- Telephone or Hotline Support
Each of the 13 categories has several subcategories under them for the vendor/supplier to rate on a scale from “Excellent” to “Poor.”
The Vendor Review Tool is a handy way for participating distributors to quantify the relationship. In fact, that is the goal for distributors: to be able to have something that they can go back to the suppliers with and show them some excellent things that they do for them, as well as some things that they believe could be improved to make the relationship even better than it was.
“Because this tool quantifies the major factors of the vendor/distributor relationship, you may find that something a manufacturer thinks they're doing really well, maybe the distributor disagrees,” Gee says. “Or vice-versa; maybe something that the supplier has been trying to fix or improve turns out to be something the distributor really likes.”
The Controls Council proactively presented this survey to their suppliers at the 2007 HARDI Fall Conference through its liaison committee process. Each liaison chair came to the conference prepared with specific distributor feedback using the newly developed Vendor Review Tool.
The distributors associated with each liaison committee confidentially rated their suppliers on a 1-5 scale using 54 of the subcategories. The liaison chairs tabulated the results and presented them to the suppliers for their use.
“This was very well-received and led to great discussion and benchmarking for use by our suppliers to aid them in developing better communication models with us, their partners,” says Steve Roe, a member of the Controls Council who works at MICONTROLS Inc. “The Controls Council intends to do a repeat performance using this tool in the fall of 2008,” Roe continues. “The tool will have several enhancements, including a refinement of a summary tool written in Excel by Peter Walsh of Columbus Temperature Controls. Truly, this is a team effort.”
Although the designers originally tailored this tool to the needs of controls distributors, there is a template that is applicable to any HVACR distributor. According to HARDI, once the Controls Council gets this tool to where they want it, they have agreed to open it up and make the template available to all HARDI members.
“Until you really use this tool and go beyond the esoteric conversation over the phone, you can't really improve the relationship — you don't know what is working and what isn't working,” Gee says. “Instead, you make changes [based] on the last phone call you got, which is not necessarily the best way to go.”
The tool is about improving relationships, not about beating up the suppliers or extolling the virtue of distributors. It's keeping both parties prosperous, as it will help both the distributor and the supplier know where the time and effort need to be to improved.
“Our underlying thought was this: Suppliers must hear from us — and not just complaints and demands,” Roe says. “The Vendor Review Tool idea is in its infant form, but we are now offering feedback to our suppliers intentionally, formally and with repeatability, so that as their customers, we can increase our perceived and actual value.”
The bottom line, according to Gee, is to always keep it in perspective: this is for improvement; it's not for leverage negotiation. A lot of time, money and effort can be wasted trying to improve something that may not need improving.
“When something goes wrong (or right) in any part of the process, the manufacturer needs to know that the distributors care deeply and are willing to talk about it,” Roe says.
And that is how good communication starts… with a willingness to talk about both the good and the bad. With good communication between vendors and suppliers, both can benefit.
With the Vendor Review Tool developed by the Controls Council, soon all HARDI members will be prospering, thanks to the opened communication lines between vendors and suppliers.
Pete Grasso is an associate editor with Contracting Business magazine. Contact him at 216/931-9439 or [email protected].