Master Distribution From The Customer's Perspective
Those surveyed by SUPPLY HOUSE TIMES show master distributors to be an important link in an increasingly complex supply chain. More than half say they at least “occasionally” choose to patronize a master distributor even when the same goods may be available from a manufacturer or manufacturers agent. More than a quarter say they do so “always” or “frequently.”
PHCP wholesalers say they are relying on a few master distributors over and over to fill a demand economically and quickly for the large variety of products in the marketplace.
Only 14.4% of survey respondents say none of their purchases came through this channel. Almost half, 48.1%, report a relatively tiny 1-5% of their purchases in 2003 came through PHCP master distributors. Another 13.8% bought 6-10% of their purchases through them, 13.1% bought 11-30%, and 10.6% received more than 30% of their purchases from master distributors.
A small number of respondents claim to use more than 10 master distributors. Most, 55.8%, used between just one and four in 2003, and the second largest percentage - 19% - used between five and 10.
The SUPPLY HOUSE TIMES 2004 Master Distribution Survey was a Web-based questionnaire distributed to some 4,000 PHCP wholesalers in all regions of the United States. The response rate was 9%, higher by several percentage points than the usual expected response for a Web-based survey.
The Importance Of ServicesWholesalers were asked to rate the importance of a variety of services when looking for a master distributor. The rating was on a 1 (“not important”) to 5 (“very important”) scale. “Low or no minimal order quantity” was the most prevalent response, with 60.5% rating this factor as either 4 or 5 in importance. The accompanying chart shows this factor with the highest average response of 4.35. The relatively higher rating (3.25) given to the “Other” category begs for an explanation of what those other factors are. Here are some of the things cited:
-- “Available inventory” (most responses)
-- “Low price, fast delivery”
-- “Ships immediately and complete”
-- “Customer service”
-- “Does not sell to end users”
-- “Easy to do business with”
-- “Good products that are up-to-date”
The Leading Supplies And SuppliersTracking the characteristics of the SUPPLY HOUSE TIMES audience, plumbing supplies head the list of the most-purchased items, at 76.2%. Industrial PVF and HVAC were cited by 23.1% and 28.7%, respectively, closely reflecting those proportions in our readership. The remaining 10.5% of the most purchased items fall into an “other category,” which included mentions of everything from hardware to controls.
To nobody's surprise, Your Other Warehouse stands out as the respondents' top write-in choice when asked from which master distributors they purchase. Stock Market and LCR Corp. follow as the other leading PHCP master distributors. Distribution Point and Ferguson Enterprises were also among the top five mentions, and another 144 master distributors are write-ins.
Where Is Master Distribution Going?The future of the master distribution role in the industry looks steady with 59.5% of those surveyed saying, “Master distributors will remain important to my business.” The question asked the respondents to choose the statement that best describes the company's future relationship with PHCP master distributors within the next three years. Master distributors will become “more important” than they are now, according to 9.5% of respondents. The same amount - 9.5% - say master distributors will become “not at all important” to their businesses. Furthermore, 21.5% say they expect master distributors will become “less important.”
How does that compare to current relationships? In response to the question, “Which of the following statements best describes your company's present relationship with PHCP master distributors?” 7.6% say they are “more important than ever,” 57% say they are “just as important,” 22.2% say they are “not as important as they used to be,” and 13.3% say they “have never been important.” In amounts of frequency, 58.3% say they only occasionally purchase from a master distributor instead of a manufacturer or manufacturer's agent. Another 23.7% say they frequently purchase this way, yet 16% say they never purchase from a master distributor instead of the manufacturer or agent.
The importance of timeliness keeps the master distributor a key member of the chain. Those who can supply the services customers deem important and deliver the necessary inventory promptly will come out ahead.