Getting customers to choose your company!

Price, quality and availability are key measures of vendor performance although there is little differentiation to be gained on these buying influences alone. In today's competitive environment leadership in the supply chain now comes from vendors committed to other areas that are equally important because they deliver measurable value to your end-user customers: cost reduction, e-commerce capability and technical assistance. Increasingly, distributors are developing catalog strategies, both in print and online, to respond to these expectations. Below are some trends as they relate to end-user expectations and vendor solutions.

Catalogs drive costs down.

1. End-users want one-stop shopping for non-specialty commodity items. Vendor rationalization programs have been shown to reduce cost of the purchase price by up to 15%. In addition, with the cost to issue a single purchase order between $47 and $70, the cost savings are significantly increased by reducing the number of purchase orders and consolidating purchasers with a single supplier.
2. Vendor reduction programs are creating opportunities for some distributors and barriers for others that cannot efficiently manage these strategic trading relationships. In 2001, Progressive MRO Distributor Magazine highlighted this reality in the Safety Equipment market where in 11 out of 15 safety product categories (i.e. Eye, Head, Hearing, Respiratory, First Aid, Gloves, etc.) end-users prefer to buy from general-line industrial distributors rather than safety specialists. The reason stated for this is the lack of value-added benefit the distributor brings to the supply chain for what the buyer considers commodity items.
3. 60% of catalogers are positioning their web sites as customer service portals to help lower their transaction costs by adding self-service tools for product information, order entry, tracking, catalog requests and data collection. Catalogs are seen as the most effective way to drive web site traffic, with the majority (69%) of new web customers acquired through catalog mailings. (DMA State of the Catalog Industry Report, 2001)

Cataloging strategies support e-commerce.

1. End-users are shifting procurement services to distributors.
   Needing to have "just in time" access to the broad range of products being purchased by your customers and the ability to handle non-stock products profitably are critical driving forces. Distributors must manage the sale of non-stock items cost effectively. As catalogs become larger and electronic catalogs grow, so does the likelihood of requests for non-stock items. It is not uncommon to find distributors who sell over 50% of their volume in non-stock product.
2. End-users with multiple geographic locations (national accounts) and diverse product requirements expect distributors to service their requirements from a single touch point.
   Distributors without a national presence must create strategic partnerships and alliances to supply national accounts profitably and seamlessly. The pressure is on the independent distributor to provide lower cost products and fast delivery without sacrificing expertise, access and profitability.
3. End-users expect a streamlined and accurate process.
   From product search, requisition, and purchase order to payment, the business transaction is being automated. The Internet is a medium by which buyers and sellers can be linked together in trading communities. Shortening the supply chain, facilitating self-serve information exchanges and simplifying transactions brings labor efficiency, cost savings and streamlined relationship management of trading partners.
   
   Automation of the ordering process decreases errors; Cisco Systems reports that 25% of their pre-web orders had to be re-worked because of errors. Since adopting a web-based ordering system, Cisco reports an error rate of only 2%. (Cisco News Release, 1998)

Cataloging strategies differentiate you from your competition.

1. End-users increasingly expect everyone in the supply chain to add value - they need to know the value you add. Knowledge is your commodity in today's information age. Distributors add value by providing relevant and timely access to their knowledge (information), products and services. Distributors who leverage their knowledge assets create preference for themselves while building barriers to competitors. The customer's awareness of your capabilities and the value you add is paramount to becoming a preferred source for materials. Communicating this through a variety media - print, CD, Internet, trade advertising, etc. - requires consistent, timely and relevant messages. Communicating your differential advantage through advertising campaigns reduces the cost for your sales representative to sell your products to your customers by 10%-30%; it also increases the cost for your competitor to sell to your customer by 20%-40%.
2. End-users are more educated about their options. Increased competition is coming from new entrants in the market. End-users are being presented with more information; your challenge is to break through the clutter to create space for your company. 76% of buyers require some sort of information about the products they purchase (Cahners Research). 61% of buyers prefer a print resource (Thomas Directory). 88% of manufacturing professionals access the Internet on a daily or weekly basis and 81% of buyers expect their Internet usage to increase in the next 12 months (Cahners Research).

Conclusion: