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First and foremost, it’s all about logistics

By Matthew Spieler

A distributor may carry the best possible products available; a distributor may have the very best employees; a distributor may offer the best tools and resources—from expert training to terms even the local bank cannot match—but none of it matters if the distributor cannot deliver those products and services in a timely, consistent manner.

Without a reliable logistics system, a wholesaler might as well close up shop. Logistics, or the process of moving product from Point A to Point B—and sometimes to Point C—is what distribution is all about.

“Getting product to customers on a timely basis is one of the top—if not the top—reasons for a distributor’s existence,” noted Dennis Cook, president of Gilford Flooring. “We can have great products, but without the means of getting them to the customer, it means nothing.”

Torrey Jaeckle, vice president of Jaeckle Distributors, agreed. “The fewer points of contact a retailer has to deal with on any one job, the easier it is for him to manage each job. Distributors offer dealers the ability to procure the flooring, trims, adhesives and other sundry products all from one source, delivered together, with one delivery charge. And we can deliver product to the dealer or directly to the job site if necessary.”

Hoy Lanning, CEO of CMH Space Flooring Products, said the distributor has two major jobs outside of sales and marketing: inventory and delivery. “These have become more important over the years because there are so many choices.” He pointed to wood as an example. “It was once an upgrade; today there is handscraped, smooth, different colors, engineered, solid and so on. So it’s beneficial to have someone who knows the products and has the ability to merchandise all of them.”

Scott Rozmus, president of FlorStar Sales, agreed. “Logistics is among the hallmark services a distributor provides. While at a very basic level the concept of picking and delivering material may appear simplistic, there is more to the process than initially meets the eye.”

Beyond offering numerous choices of a product, among the core logistics values a distributor offers, he added, is the ability to “consolidate orders across different product categories or, at times, different brands. As long as quality distributors service them, retailers need not worry about stocking a host of SKUs within and across various categories.”

Along with being able to offer all types of products and their multiple styles, Jaeckle said distributors offer dealers the ability to receive everything at one time, “so even when there is a back order, we can hold the entire order until everything is ready to ship, saving retailers from having to store product on site and allowing them to keep all the merchandise for one job together.”

Rozmus said this ability to bundle products presents a tremendous value to retailers, who need not tie up working capital in equipment, software or, at times, inventory.

On the flip side, he said distributors provide value not just to retailers but manufacturers as well. “Without the nation’s independent distributors, many foreign manufacturers would have little or no means to get to the market because of the capital investments and specialized equipment often required. The distributor’s ability to understand local markets allows it, first, to identify product needs and, next, to establish sufficient inventory levels to provide timely service to those products in demand. Smaller, cut order quantities of hard surface often cannot ship safely or efficiently over great distances directly from a port. Accordingly, the distributor’s ability to maintain local stock and then accurately and efficiently pick, package and deliver that stock saves the manufacturer significant expense.”

In addition to giving foreign manufacturers access they normally wouldn’t have, which also gives dealers access to products they would not normally see, Jaeckle said wholesalers save mills—foreign or domestic—from having to deal with thousands of smaller customers and smaller shipments. “Mills are equipped to handle and process large—usually full truckload—shipments. For a manufacturer to service each dealer directly it would require the mill to process tens of thousands of smaller LTL (less-than-truckload) shipments per year.”

Distributors, she continued, are well equipped to do just that. “For every truckload of full pallet material our manufacturers ship us, we are breaking it down into about 40 to 50 smaller shipments to be sent throughout the Midwest to various dealers.”

Technology

So just how do distributors take the massive amounts of product they receive from multiple manufacturers and get each item to the thousands of retailers they service? Technology.

“It’s hard to believe we can do the amount of business we do today with the number of people and trucks,” said CMH’s Lanning. “No way could it be done without the technology we have. In the 1990s we had a cardex file, or index card with inventory. Back then having an 800 number was an added benefit. Today, a dealer can call at 3 p.m. and we can get the order to him by 7 a.m. the next day.”

The use of technology applies to everything a distributor does to ensure fast, on time and, most importantly, accurate deliveries. Gilford’s Cook noted a “computer system for routing is a must. It allows us to track trucks and get the most efficient routes and delivery schedules, saving fuel, time and effort, which allows us to keeps costs down for the retailer.”

In addition, he said successful distributors have computer systems to which dealers can connect to know exactly where the truck is “so they know when it will arrive, which allows them to prepare and be ready when it does. This saves them valuable time and effort because they are not surprised, meaning they don’t have to rush around and make accommodations or have people standing around waiting for the truck to arrive.”

While technology has become a key component in helping make a distributor’s logistics operation more efficient, executives said it still comes down to people making the system work best for the entire chain.

Distributors should employ people who are willing and able to work with dealers to understand their logistical needs and, where required, to solve logistical problems, FlorStar’s Rozmus said. “The best people are technically competent, cool under pressure and highly responsive.”

Gilford’s Cook couldn’t agree more, saying this is true from customer service to the truck driver. “Certain customers routinely buy various products, and our customer service people are trained to make sure they need those items when ordering. This is important because when the dealer is placing an order they are not usually thinking of this. Many times in the past a dealer would call in a panic because he didn’t have enough padding or grout, etc. That doesn’t happen now.”

As for the people driving the trucks, he said, “For 90% of our territory, it is our trucks and our drivers; they wear Gilford uniforms. They know what’s happening at the dealer level and will go the extra mile to make sure the customer is satisfied with deliveries. They get to know the dealers—some retailers even give our drivers the keys to the door because of the trust and confidence they have in them. That’s a great honor and it says a lot about the people we employ.”

Where is it all heading? No one could say for sure, but perhaps Lanning said it best: “It’s become so sophisticated today versus five, 10 years ago and it really makes us accurate and more efficient. But the sense of urgency from people is the greatest I’ve ever seen and is where the whole process is going.”