Why Manufacturers Are Now Using PAR Reports
Dr. Albert Bates, President — Profit Planning Group
• supply chain issues • manufacturing strategy • Profit Planning Group • PAR Reports
Monday, November 24, 2014—I recently sat down with Al Bates, from the Profit Planning Group, to discuss industry numbers and how companies can improve their performance. What I found exciting is that a number of manufacturing companies are starting to use the Profit Planning Group's numbers and how the Profit Planning Group's power reports are really working to support things for those particular segments in distribution.
"Historically we've been involved with trade associations," Al told me, "but about seven or eight years ago, leading manufacturers began to say, ‘Hey, I'd really like to know what my distributors are doing versus what the industry is doing.' What these manufacturers found is that by putting the numbers together they can begin to develop a network superior to the industry average where they could cut down on the number of distributors that they lost or had to add, thereby reducing costs." By knowing how much it costs to replace a distributor (which is a lot!), manufacturers recognize that a large part of being successful involves helping distributors to be successful.
A manufacturer obviously can't be successful without distributors and vice versa, Al continued, so there's a definite advantage to working closely together. The benefit of tightly integrating that relationship is a reduction in unnecessary costs that allows both the manufacturer and the distributor to do business at a lower price with a higher degree of efficiency. These companies don't have a relationship on the same level that Wal-Mart does with its suppliers, but they're getting close.
I can see a lot of wisdom in the leading manufacturers beginning to do this. If you're a manufacturer looking for a great way to enhance your ability to get, collect, and keep the best distribution companies, there are certainly some benefits. Distributors likewise benefit from having manufacturers interested in helping them succeed. Improving the relationship between manufacturer and distributor can easily improve both companies' profits.
For more information about Dr. Albert Bates, visit: www.profitplanninggroup.com