Conflicts in channel hinder growth: survey
Strained relations are a concern, he said, because a majority of manufacturers and wholesalers surveyed by Sedgwick believe that they are one of the major reasons that the HVACR industry has a problem growing. Sedgwick surveyed NHRAW's members and associate members (manufacturers) in 2000. Other sources of stress include:
- Failure to understand each other's business in a changing marketplace;
- Conflicting goals, strategies or capabilities;
- Actual or perceived performance shortfalls; and
- Procedural conflicts or system inflexibility.
A failure to communicate can add to these problems, Sedgwick said. For example, many manufacturers do not believe that wholesalers do any strategic planning.
"Wholesaler-distributors are doing more strategic planning than they were seven or eight years ago, but they are not communicating that to manufacturers," Sedgwick said.
At the root of the conflict is a fundamental difference in the nature of a manufacturer and wholesaler, he said.
"Most manufacturers are in one line of business," he noted. "Wholesalers are in two to six lines of business. Wholesalers have to have multiple strategic plans, and they have to explain their situation that way to manufacturers who are in only one line of business. A wholesaler can't communicate with a manufacturer unless he can communicate about a manufacturer's line of business specifically. A wholesaler should spend one day a year with each of his manufacturers at an executive level to talk about joint strategic planning."
To improve relations, Sedgwick said, wholesalers and manufacturers should take a number of steps. Significant actions for a wholesaler include:
- Develop marketing strategies for each line of business;
- Grow the company; and
- Control or influence a changing dealer base, which includes not only independent HVACR contractors, but also consolidators and utilities.
- Set realistic goals, provide appropriate resources and communicate their strategies to their wholesalers;
- Provide a differentiated product to the wholesaler and a compelling business proposition to sell it; and
- Provide a competent, well-trained sales representative.
Most importantly, wholesalers and manufacturers have to talk to each other, Sedgwick said. To that end, NHRAW provided a Wholesaler-Manufacturer Discussion Tool and a Wholesaler-Manufacturer Relations Self-Assessment Tool. The pamphlets address such topics as partnering, communication and setting goals.