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This is a question I get a lot when people ask about 4C and what we do. They always find it hard to understand that if the supplier knows the end-user and the end-user knows the supplier, why don’t they work together directly? Basically, what do they need us for?
When I first started 4C, I wondered the same thing, so I was always worried about being left out of the loop or completely cut out of the next deal. I shared my worries with a good friend in the business, and he gave me some really good advice. If they want to cut you out, let them. Let them try to do the next deal without you. They’ll soon come back.
And my friend is right. We do, in fact, play an important role.
Most businesses are just not set up to handle dealing with a global supply chain. Sure, they can run it all by themselves as long as everything goes as planned, but we know that never happens. Problems happen and then panic ensues. Every business has its pool of skills and the reasons why it is successful. But supply chain management expertise is not something most companies have. There’s not even one person on staff that knows how to do it, let alone an entire dedicated department.
I have been fortunate enough to have experience with both big business and small business global supply chains. This week I want to focus on big business, and next week I’ll talk about small business global supply chain management.
Why would a $100-million-plus business purchase and sell through a distributor?
- Money. Companies are looking for financial support. The supplier won’t offer it and the customer doesn’t want to get it from a bank. They need someone to help them finance the deals.
- Staffing. One or both of the companies are understaffed and overworked so they need companies to come in and take some of the burden off of their shoulders.
- Marketing. A lot of manufactures do little to no marketing of their products and prefer to rely on distributors to market their products for them.
- Customer service. When the customer is smaller than the producer, they often aren’t treated well. They’re not treated as a high priority. Usually distributors have really good relationships with their suppliers, so they can get better information and pass it onto customers.
- Culture. In a global supply chain setting you often have two cultures, and that can lead to conflicts, so the distributor is in the middle to make sure everyone gets along.
- Time. Customers don’t have time to dig around looking for quality suppliers, so it’s valuable to them to pay a distributor to do it for them.
- Focus. Most importantly, a good global supply chain management company should be only concerned with developing the best possible processes to pick up goods and deliver them to customers. Their processes should be so good the producer and customer can’t imagine doing deals without the supply chain management company.
- Logistics. A supplier tried to send product via FedEx instead of an LTL trucking company. By arranging a trucking company to do it we saved close to 75% on logistics and it took the same amount of time to move it.
The bottom line is that the supplier and customer shouldn’t have to do anything or have a single worry. They need to know the global supply chain manager has arranged every single step of the process and proudly takes responsibility for each step. Nothing is left to chance, and if and when a problem occurs, the manager won’t run away from it.
So, to go back and answer my original question one more time, we do a lot. And oddly enough, it’s nice to think people sometimes forget just how important we are. It means things are moving smoothly. We are the wheel that never squeaks.