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Perspective
October 02, 1995 02:00 AM

COLOR SUPPLIER-DISTRIBUTOR RELATIONSHIP CHANGING

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    North America's multibillion-dollar plastics materials market has been evolving since the early 1980s, as price fluctuations have forced a dramatic change in the way products are manufactured and sold. In turn, market dynamics have forced the relationship of distributor and supplier in new directions. Today, major resin producers have virtually eliminated their pre-color small-lot business in order to trim expenses and improve profitability. A conscious decision has been made to channel this business through distribution. These producers have consolidated sales forces to improve efficiency and refocused their efforts on large accounts, as evidenced by substantial minimum-order quantity increases for pre-colored materials. Longer lead times - up to 26 weeks for polycarbonate - also have played an important role in the decision to forgo small-lot business. Market indications detect a significant shift away from this custom form of color toward the easier-to-obtain standard colors.

    Changes within the small-to-medium-sized processor market also have impacted the independent distributor and color supplier. Frequent orders in small quantities, shortened lead times and the demand for quality color have been evident. Environmental pressures to reduce risk and exposure have processors demanding certification of analysis, material safety data sheets and other supplier compliance documentation for regulatory issues. Expectations for improved vendor service levels such as these have been the catalyst to bring the distributor and color house closer together.

    Distributors are well-aware that small-lot users have an increasing need for integrated product, pricing and technical information services once supplied by the majors. Material suppliers are instituting intensive training programs to help the distributor-affiliated technical representatives fulfill the now ``full-service'' role they are challenged to play.

    To satisfy this diverse customer base, distributors and suppliers have begun strong marketing partnerships with complementary products. As a result, offerings such as color concentrates and additives have consistently gained popularity on the distributor's menu. They are no longer just a resin supplier, having evolved virtually to a one-stop shop for customers.

    Color is becoming increasingly important to the independent distributor as processors become more sophisticated - demanding fiercely competitive prices and value-added products. Increasing their product and service offerings on both a horizontal and vertical base requires distributors to offer resins, additives and color, in a variety of forms.

    Recently, multipurpose and stock colorants sold through distribution have met with significant market acceptance. Industry experts believe that within the next two years, custom color will begin to show its strength in the distribution chain. Polymer-specific color concentrates, including the ever-popular heavy-metal-free standard product lines, will be available for processors with critical color needs for engineered resins.

    As 2000 looms, hemispherical distribution for resin and additives should increase, for distributors and suppliers are becoming true partners, sharing both resources and assets. On-line access has allowed trading partnerships to have better planning, inventory monitoring and quicker order processing - all a plus to customers. Distributors can now provide state-of-the-art technical service such as design assistance, material selection, trouble shooting and process training.

    In all likelihood, within 10 years a few international distributor organizations will dominate the materials market. To maintain their 20 percent annual market growth (vs. 6-8 percent of the industry in general), distributors will continue to need to add value and diversity to their product selections. Color, in stock, standard and custom forms, will be a significant factor in this growth.

    Smith is vice president and general manager of ReedSpectrum, a Holden, Mass.-based manufacturer of color concentrates.

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