Value and price symbol. Businessman turns wooden cubes and changes the word price to value or vice versa. Beautiful yellow table, white background, copy space. Business value and price concept.

Combine these supply chain hurdles with escalating fuel costs brought about by heightened global uncertainty, as well as some pretty brazen profit-taking by multinational fossil fuel companies, and distributors will come face to face with inflation. Many industry manufacturers are trying to minimize price hikes, but at some point, increases on industry product staples might be inevitable. This leaves distributors in the driver's seat regarding whether or not to pass those increases down to the end users. 

Trinks comments that distributors have no choice but to pass down these higher prices. In fact, he says, there is no way around it. Carrizales agrees. 

“Many of the margins that distributors work on are slim. As much as we want to help defray costs for our customers, we are a business and can’t work at a loss,” says Carrizales. “If we were to take a loss, we may not have the capital available to resolve unexpected issues necessary to meet customer needs at a level that our company and our customers have come to expect.” 

This is a bitter pill for customers to swallow, for sure. But there are ways to ease the pain. That starts with a commitment to transparency and clear communication.   

“Inflation is an ongoing problem with significant impact,” says Carrizales. “Educating our customers has been extremely beneficial as we all tackle the effects of inflation. To that end, we created a PowerPoint presentation for our customers that shows supply constraints and what has pushed price increases so that it’s clear that both are global, not local. This insight and proactive communication have been well received and opened a lot of eyes as to what the manufacturing, transportation and distribution segments are facing, as well as the lengths that we have gone to help the customers.”    

Portland State’s Wong agrees. He stresses that what distributors bring to the table is product and equipment availability, and they shouldn’t necessarily focus on price. 

“Explain the math to your customers and stress how your company took on the financial risk by holding on to that inventory,” he says.  

Wong also suggests looking beyond selling products and leaning hard into services like training and equipment maintenance to add value.  

Keeping Customers Happy 

Throughout the pandemic, distributors all over the country have been forced to adjust and pivot to keep products and equipment moving. That includes expanding partnerships and exploring new opportunities. 

“To make our own supply chain even more robust, we proactively reached out to our current manufacturer partners, as well as suppliers who we may or may not have done business with in the past,” says Carrizales. “While some of the traditional items we stocked are no longer available, we’ve been able to source similar products to keep customers up and running.”  

Experts agree that in this type of market, a distributor that can remain nimble is important. Customers will benefit from working with a supplier that can adjust quickly to provide the necessary products required to run their business.  

One adjustment many have made recently is the move toward more concentrated chemicals. According to Trinks, this small change could mean big savings when it comes to shipping costs. He also recommends distributors explore technological opportunities and innovative processes that will help end user customers. This type of thinking outside the box might prove valuable for distributors in terms of customer retention and growth. 

“Put together turnkey solutions for customers and look at new market segments,” says Trinks. “Customers only change distribution partners for two reasons: an advance in technology or lower cost. It is absolutely possible to win new customers if you put together a suite of innovative, best-in-class products.” 

When it comes to customer retention, Huizenga hasn’t experienced the see-sawing of accounts that economists are cautioning businesses about.  

“You would assume that, given the current state of product price increases, that customers would be open to seeing new vendors and evaluating proposals,” he says. “However, labor shortages, customers wearing ‘too many hats’, and overall ‘busyness’ is keeping end users from appointing new vendors.” 

In terms of growing their client base, though, Huizenga is facing a few hurdles.  

“Work from home is creating challenges when attempting to earn new customers,” he says. “Sellers need to embrace the technology tools available, including virtual sales calls and the good old-fashioned phone to get in front of prospective customers.” 

Though times are tough, and challenges seem daunting, creative solution-seeking and clear communication will continue to pave a strong path forward as distributors navigate these shared obstacles.  

Amy Milshtein is a freelancer based in Portland, Oregon. She is a frequent contributor to Sanitary Maintenance.  

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Maintaining Relationships While Battling the Supply Chain