How Buying Groups Help Distributors Navigate Changes In Jan/San
- Buying Groups Address Industry Challenges
- Distributor Consolidation And Where Buying Groups Fit In
- Benefits Of Buying Groups
The industry has been in a state of change over the last few years. With the growing number of baby boomer owners nearing retirement, many are considering mergers while others are onboarding the next-generation CEO. Meanwhile, manufacturer acquisitions, those increasing their direct-to-end-user sales and the continued growth of e-tailers entering the market remain threats to traditional jan/san distribution.
To fight these challenges many distributors are seeking assistance from buying groups, specifically opportunities for product availability, group discounts, networking and help with the next phase of their businesses. To get the answers readers seek, Sanitary Maintenance asked buying group executives to weigh in on how they can help. Here are their answers.
Zachary T. Haines
DPA Buying Group
National Independent Sanitary Supply Companies (NISSCO), LLC
The United Group
Vice President Of Member Development
What is the main reason someone would join a buying group?
Chow – Independent distributors should focus on aligning with a true dealer group. Such a group should be designed to help in a variety of ways, including by leveraging purchasing capability, helping with sales and marketing, facilitating networking and member collaboration, and providing comprehensive education and training tools.
Huffer – Prospective members are looking to join a buying group so they can have a place to discuss business and industry concerns with like-minded business professionals. They also want the ability to leverage the buying power of an entire organization and to maximize relationships with national suppliers.
Haines – Buying groups use a "strength-in-numbers" approach to negotiating with suppliers, which allows our distributors to benefit from better discounts, marketing allowances and extra savings. The networking advantage is also a big motivator. Members can establish relationships with many of the high-level manufacturer executives. If there is ever a problem, there is someone to go to that might not have been accessible before.
How can distributors maximize their value/ROI with a buying group?
Allison-Foster – By taking advantage of all the opportunities available to them directly from the supplier (special promotions and pricing, rebates, training programs and marketing tools), distribution members gain the most advantage. They’ll also see value by being purposeful about moving business inside the supplier portfolio.
Haines – The greatest return on investment is if a distributor consolidates their "spend" with the group's preferred suppliers. In doing this, they will earn larger returns each quarter.
Another way to maximize their value is by attending annual buying and networking conferences. At the DPA show, distributors meet face-to-face with the group's suppliers, they can network with each other, and also take advantage of "show special" promotions. The conference is a great way to learn about new companies and products. Members can also learn a lot by participating in roundtable discussions whereby distributors share their best-practices to common challenges.
We are all dealing with a lot of the same issues in our businesses and these roundtable meetings are a wonderful way to find solutions to those shared challenges.
Huffer – I help provide our members with the tools and programs to help them grow their sales that they may not have access to without their membership in TUG. Distributors have to want to be “all in” and committed to participating in the group. That includes but is not limited to attending national and regional conferences where they can work with preferred suppliers to help learn new trends in the industry and utilizing the support staff of the group.
Chow – The key is engagement. Well designed and managed distribution networks offer a plethora of resources, tools and programs that offer tremendous value. It is up to the distributor to seize the opportunity. This includes engaging with the overall value proposition, utilizing inventory efficiencies, working with preferred manufacturers, and taking advantage of tools and resources. Distributors should have an open and candid discussion with their network in order to develop a strategic plan to ensure their needs are met regardless of whether they are focused on manufacturer programs, improving turns, inventory control, sales objectives and/or service needs.
Do millennials coming into the industry understand what a buying group is and its value?
Chow – We work very closely with members to help them identify new representatives who will be a good fit for their organization. This includes millennials. And while they may not immediately recognize the capability and benefits of a distribution group, they are inherently social beings who see the value of belonging to a network. One of our goals during the hiring and onboarding process is to help set goals and educate them on how Triple S can help. It doesn’t take long for them to understand the value.
Haines – I am not seeing a large number of millennials coming into the business. With that said, the ones that do, understand the concept but might not fully appreciate all that the group has to offer. It is the group's job to educate on what's there, but also look for new ways to add value as the industry changes hands to its future stewards.
Buying Groups Address Industry Challenges
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