A one-time event, advice for suppliers

OK, this is a one-time event, advice for suppliers. 

First sage piece of advice… supplier’s organization structures are built incorrectly, specifically for dealing with their distributors in today’s world.  This one has always bothered me since I first started consulting to beer distributors in the early 80’s.  Other than the consumer, who is the most important entity for any brewer?  Their distributors!  Nothing gets done without the distributor.  Nothing.  No matter how good the chain program is… no matter how spectacular the national advertising… no matter how incredible the product might be… nothing happens on the street without the distributor executing.

Yet who do the suppliers put as their main contact person with wholesalers?  They use it as an entry level position… one of learning and training.  I’m certain many (most) wholesalers would agree that THEY are the ones who train the local brewery rep… and once they finally get one trained, off they go and another newbie takes their place.

I ask you… why would you put your most green people in direct contact with… having primary, front-line responsibility for managing your most important client/partner?  Doesn’t this seem like a disconnect?  That something just doesn’t make strategic sense of this arrangement?  Sure does to me.  Green people managing the most important client/partner?  In effect being trained by them? 

I can’t tell any of them exactly how they should build their organizations since I don’t have adequate information on their organizations, desires, etc. but a change certainly seems in order.  These wouldn’t just be higher-level employees doing the same things as your present entry-level brewery reps do… the entire position would have to change. 

There are probably even some cost savings in this since many middle-level managers who presently manage the street-level brewery rep would no longer be necessary (at least in that role).  You might need more of these more senior folks to manage and partner with your wholesalers, but the net-net would probably be:

*          A reduction in overall personal

*          A flatter organization structure (always a good thing)

*          Decision-making authority at the point-of-contact

*          Better execution and coordination with distributors

I realize that the requirements of these new positions somewhat contradict the old way of getting “up the corporate ladder”.   But so what?!  There are fewer and fewer wholesalers and each is becoming more and more important… you need to address this reality.  And I believe there is strategic advantage for those who do.

In addition, if a more senior person was primary contact for the distributor, perhaps the never ending travel to various meetings could be cut down substantially.  These senior people can present the supplier’s information in an effective manner, making the constant meeting schedule a thing of the past – saving wholesalers and suppliers some serious cash and A LOT of time. 

I had also planned to give the suppliers some insights on strategy… my gut belief is far too many of them still think of themselves as brewers.  Any company that spends almost $1 billion on sales and marketing (or about half that for Miller and half again for Coors) in my book is a sales and marketing company which also happens to produce beer… I don’t care if they outsource the marketing or not.  50 years ago they probably “were” a brewer… not today.

I told this to a group of middle-level managers at one of the major suppliers and they looked at me like I was speaking Martian… they do so at their own peril.  It was kind of sad, watching these managers, in marketing no less!, not be able to get their heads around the concept that their company was anything but a brewer… and the company’s focus and mission was to brew beer. 

But the big suppliers pay HUGE amounts to management consultants to help them with their strategy… and then a few years later when the management consultants have “created” a new, better than ever method to create strategy, they pay them again… and later again… and then again.  Wish I could get on that train ;-)

Therefore I will keep my strategic insights to myself but will be spending some time on strategy for wholesalers in an upcoming post. 

Next post – Is there a power swing back to distributors?

Comments

[Jerry Glunz]

John,
Thank you. You are dead on. I'm sooo tired of teaching these new brewery Reps the Beers Business. We are in the 3rd largest beer market in the country and we get an endless stream of kids that the next case of beer they sell will be their first. When I started selling, 22 years ago, when a Brewery Rep worked with you, it was a very productive day. You learned from his many years of experience in the business. When he gave you advice, it was based on his experiences of doing it day in and day out, for many years before he landed a job at the supplier level. Now the advice they give you is based on what they learned in the couple of days of training they received after starting the job.

[Jim Aubel]

John,
Just read your 'one-time advice for supplier' re the novice reps they send to us Distributors. This has been a sore point for me over the years. It also proves what we have always known; the Brewers do not respect the Distributors. I am new to this business; only 10 years as a 'Beerman' (whatever that means)and your note that the Brewers are a Marketing organisation could is true. Similarly, Distributors are Wholesalers that happen to sell beer. I am sick and tired of this attitude that a Distributor of beer is something different. All wholesalers have similar issues with only nuances of product type making the differcences.