(Aug. 21, 2006) — Manufacturers haven't always had the best relationships with the distribution channels that sell their products to end users and to others who apply them in real situations.
Manufacturers always want their channel partners to buy more. Meanwhile, distributors clearly understand that large inventories are expensive to maintain, especially for extensive product lines that have a multitude of options, but relatively few sales of any individual part number. And they ask what their manufacturers are doing to help them move products.
For Bosch Rexroth Corp., there are several important reasons why we are bucking the trend and seeking closer relationships with our channel partners. First, with the breadth of our product line — drive and control products across almost every industry — we cannot reach all our potential customers without their assistance.
Second, our most advanced products often need to be customized or engineered to achieve their full potential for providing sustainable competitive advantage. Thus our distributors can offer tremendous value to the customer. That's why our first question to distributors is not, “How many sales engineers do you have?” but, “How many applications engineers do you have?”
I believe this level of cooperation and collaboration is unprecedented in our industry. We exchange information with our channel partners that many companies will not share even with their own employees, let alone another business. Some examples:
c Sharing confidential information about margins, profit, investments and plans for the future.
c Access to internal inventory, order entry, order status and collaboration software.
c Close cooperation in applications engineering.
The last item is of particular importance. In essence, we are giving our distributors a share of our brand positioning.
The benefit to customers is significant: With the equivalent of a factory employee around the corner, they get much better service.
For distributors, the benefits are equally significant: We have a clear understanding about how both partners add value for the customer. And while the industry has been in the midst of a rather lackluster recovery, our sales through U.S. distributors have doubled since 2002. And I expect more of the same: In order for us to achieve our rather ambitious sales goals — $2.5 billion in North America by 2014 — sales through distribution will have to triple.
We believe we have achieved significant sales increases, gained market share and had higher content on machines as a result of these cooperative efforts.
Dangel is president and chief executive officer of Bosch Rexroth Corp. of Hoffman Estates, Ill.