Are You Playing to Win? or Playing Not to Lose?
With the unprecedented current economic situation caused by the pandemic, the Barnes Dennig team has been focusing on the state of the wholesale distribution industry and what wholesale distributors can be doing to ensure future business success. We’ve been actively participating in webinars, conference calls, and other virtual industry events, and identified five key tactics distributors should be using now. Here they are:
Frequent, proactive communication with all key stakeholders has been a prevalent message in every single event. With your employees, be open and honest with your employees about what the company is experiencing and what steps you’re taking to move forward. Communicate the steps you’re taking to ensure their safety, and that their safety is your number one priority. With your customers, stay engaged, and give them frequent, honest updates.
2. Manage Your Sales Team
With face-to-face interactions out of the picture for many, now is the time to work with your sales team, coaching them on how they can stay in contact with their lead sources and customers. Here, too, communication is key.
- Establish new goals and targets.
- Have daily huddles to share knowledge and updates on progress.
- Develop a list of your true customer contacts, and build a customer management system.
- Provide additional, specific training for sales team members who need it.
3. Listen to Your Customers
Communication is a two-way street. The pandemic is blind to the companies and individuals it impacts, and it’s important you’re listening to your customer needs and offering solutions anywhere you can while ensuring financial stability.
- Communicate realistic sourcing solutions for products that are in short demand.
- Offer to manage your customers’ supply chain.
- Let customers know where they stand in terms of prioritization.
- Identify customers that are at particular risk, and consider offering special payment terms with a focus on long-term success.
4. Vet Your Vendors
The pandemic is affecting all parts of the glove, and the sourcing of materials has slowed. That’s creating tremendous backlogs and pandemic affecting all parts of the globe, slowing materials sourcing, and causing large backlogs. Now is the time to work with your vendors, identifying which ones will be your true partners as we transition out of the pandemic.
- Renegotiate any volume incentive rebates to make them more realistic.
- Consider utilizing drop-shipments from vendors to customers, to reduce contact.
- Distributors with strong cashflow should also consider:
- Approach vendors and offer to expedite payment for additional quick-pay discounts.
- Building inventory levels to be able to fulfill customer orders in the future as business starts to pick back up. This will ensure that you have the safety stock to fulfill orders as global supply chains remain strained.
5. Review Your Financial Viability
Now is the time to take an honest look at the balance sheet and project out any potential cashflow needs that will be coming to the forefront in the immediate and near future.
- Work with customers on the collection of accounts. (Include a collaboration between finance and the sales team).
- Aggressively manage backorders so open purchase orders can be fulfilled and billed to the customer. Consider substituting items with comparable products or consider purchasing from a competitor if need be to fulfill a large order.
- Review Accounts Receivable (AR) and Accounts Payable (AP) to determine customer/vendors where cashflows can be accelerated.
While these are the top tactics across the wholesale distribution industry, there are very likely others that apply to your particular situation. Talk to one of our Barnes Dennig wholesale distribution industry experts to ensure you’re optimizing your business for success.