PHILADELPHIA, PA — Manufacturers can improve their profitability by focusing on distributor relations, according to a survey released by the National Association of Wholesaler-Distributors (NAW). According to the association, the industry has declined for the 15th consecutive month, leaving many companies seeking a way to survive an economic downturn. The association also says that its study, “Facing the Forces of Change: Future Scenarios for Wholesale Distribution,” can help.

“Given the slowdown in economic activity, manufacturers must use supply chain innovation to generate a competitive advantage,” said Adam J. Fein, author of the study and president of Pembroke Consulting. “In most B2B industries, distributors are still the primary route to market. Manufacturers can survive the downturn by generating greater value from their distributor relations.”

Based on responses from 1,600 manufacturers, distributors, and customers across 50 industries, the study forecasts specific shifts in customer supply chain strategies that affect manufacturers and distributors. This includes increased vendor rationalization programs and expanding Internet use for product sourcing and purchasing decisions. In the study, 83% of manufacturers and 86% of distributors surveyed expect customers to concentrate purchases with fewer suppliers by 2003. More than two-thirds of manufacturers and distributors also see customers enforcing national supply agreements over the next five years, according to the survey.

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Publication date: 11/12/2001