Heavy-duty truck parts distribution channels were initially government surplus commodity depots. They have now evolved all the way to pushing new products and technologies to first-time customers. Great industry-wide progress.
However, the declining-value and increasing-costs of both outside and inside reps have become an expensive part of the standard, service-cost bundle. What happens in this channel life-cycle when:
Big Customers Seek Integrated Sole Supply (ISS) Benefits
Big buyers have slowly learned to copy the system McDonald’s pioneered with its distributors starting in 1956:
Entire distribution channels have largely flipped from outside rep territories to “integrated sole supply” (ISS). Drug, grocery, hardware and hospital supply channels all come to mind. Big factories—that buy a range of Maintenance, Operating, Repair and Production (MROP) items—began moving to ISS in the early ‘90’s. The trend is still growing (see MSC Industrial and Fastenal as models).
These demand replenishment systems are (sold, installed, maintained and measurably improved) by a team of people. A rep with a “relationship” can’t do it alone. The Internet-assisted customer is marrying a supplier’s past and future potential, flexible service track record, not (just) one friendly rep. Death of the Donut Patrol.
The rep’s new role with partner accounts? Be customer-centric like Amazon. Ask the customer who they want to service the account in what ways and frequencies. Those activity costs then go into the contract prices and fees.
