It’s Getting Interesting
This is the fifth installment of Advanced Issues in Redistribution which can also be downloaded from our free eBook library.
Remember the days when we tried to understand the concept of redistribution? When we first started to think about the total cost to fulfill orders of various sizes, and see if redistribution was a feasible alternative? Or when we worried about losing the relationship with a distributor if he elected to buy through redistribution?
We’ve come a long way in a short time, and people who bash redistribution these days are about as rare as people who say “this internet thing is just a passing fad.” But with the acceptance and growth of redistribution, we’ve encountered a new set of problems to worry about.
One common issue occurs when distributors insist that custom-label and deviated-priced products be available from their redistributors, putting manufacturers in a perplexing bind.
When it comes to deviated-price business being handled by a redistributor, manufacturers are concerned about added cost as well as added complexity. We’ve written many times that cost savings via redistribution are the same, regardless of “what label’s on the box, what customer’s on the bill of lading, and what price is on the invoice.” But on the subject of managing billbacks, redistribution clearly adds another layer to an already messy process, and could well add cost if it is not managed properly.
I’ve come to the conclusion that there are no hard and fast rules about the role of redistribution for private label or special-priced business. Manufacturers and redistributors need to sit down together and work through all of the specifics and “mechanics” of purchase prices, selling prices, allowances and billbacks to arrive at the right answer.
But certainly, rejecting a redistribution opportunity out of hand because it involves non-core business is the wrong answer.
Ready to work with knowledgeable Redistribution Consultants who will help you understand your supply chain costs and help build your bottom line? Contact me online or call me at (239) 395-2787. My company, Franklin Foodservice Solutions, offers knowledge and experience to help build your foodservice business. Help is just a phone call away! You can also connect with Franklin Foodservice Solutions on Facebook.
- Dave
