Distribution's Benefits to Supply Chain Woes

While the ongoing effects of an event like the current global Covid-19 pandemic are far reaching, the impact it has had on supply chains continues to affect nearly everyone across the world. While the reasons for the impact are numerous, the more pressing need at present, is how to mitigate the shortages and delays as well as possible. As expedites become harder to achieve and freight concerns continue to plague deliveries, one of the best approaches to alleviate some of the stress is to work with component distributors that can buffer the impacts and smooth out logistical systems for end customers. Distribution partners bring multiple benefits to reduce supply chain challenges. Partnerships with manufacturers allow for higher level communication, increased leverage, and consolidated spend and shipments that drive better response times than smaller volume, more frequent order patterns.

A major impactor of supply chain issues is the increase in volume of items ordered for delivery over the more traditional route of going to a store to select and purchase items. According to elogii.com, in 2020, 15.05 billion deliveries were scheduled worldwide. Among that number are nearly 1 billion restaurant deliveries and 32% of all furniture sales in the US. As these numbers increase annually, the time it takes for freight companies and critical infrastructure to adapt struggles to keep pace.

Given these increases and pressures, it makes sense to work with partners who can help mitigate these circumstances. A customer who would rather receive weekly or monthly shipments of smaller volumes will not achieve the same level of attention as an order from a distributor who may look to purchase several months’ worth of product all at once and work to supply the weekly or monthly shipments their customer requires. This planning allows for better economies of scale for the manufacturer, a reduced number of required shipments, and the ability to insulate the downstream supply chain from continued disruptions while stock remains available at the distributor. While the incoming on-time delivery to a distributor might be quite low, this ability to stock and buy in larger volumes can often result in world class outbound on-time delivery values to their customers.

While a customer may have several parts they obtain from the same manufacturer, their total spend might not be all that large in comparison to the output of the manufacturers production. Distributor partners can leverage the total spend of the distributorship to gain better traction in working with the manufacturer to achieve better results and faster response time. In the case of common or standard parts, the distributor might sell the same component to multiple customers, allowing for a greater order quantity and a resulting larger volume of inventory available to their multiple customers.

Relationships are also key in working through complicated supply chain woes. A customer needing a small run of a single item might not get the attention of a large manufacturer regardless of the downstream impact a shortage of the component might cause. Meanwhile, a distributor can reach out to key people and explain the benefits of helping the customer against the background of the total relationship, both with the customer and the distributor, and the distributor and manufacturer. Often, this can lead to improved outcomes.

As complications and complexities continue to add to an already strained supply chain system, there is tangible benefit to working with partners that can share, or even take on the stresses of logistical issues. Distributor’s role in the supply chain can help customers reduce many of the stresses through their contacts, increased spend, and the very nature of their business to carry inventory. Working with distributors to partner on supply chain challenges has been a key role in the distribution process since inception, and that important role only grows in importance as time goes on.

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