ORS Nasco News

Mastering wholesale distribution

Wholesale distributors continue to add value to the supply chain

Alittle-known term came to life in the distribution channel during the mid-1990’s and struck fear in the hearts of distribution and wholesale distribution organizations throughout the world by the end of the decade. The word was disintermediation. In the supply-chain context, this meant a growing infrastructure called the Internet was expected to connect consumers with manufacturers, thereby eliminating the need for distributors and wholesale or master distributors.

Of course, disintermediation didn’t come to pass, but during this time some businesses decided that the wholesale distribution channel was a redundant link in the supply chain and an inefficient part of an already crowded channel. Nothing could be farther from the truth. Why, then, did disintermediation fail to reinvent the supply chain? Simple. The value distributors and wholesale distributors add to the supply chain exceeds the cost they add to the channel.

Our distributors have found that working with a pure wholesaler enables them to more competitively serve the end-user. A true wholesale distribution organization is pure in that it only sells to distributors, not endusers. Pure wholesalers distinguish themselves by adding layers of value to the distributor.

ORS NASCO serves the industrial, welding, safety and oilfield distribution markets by distinguishing itself from wholesalers that sell to endusers. This distinction comes in the form of value that transcends our more than 600 vendors and 140,000 SKUs. Our distributors have found that working with a pure wholesaler enables them to more competitively serve the end-user.

From an economic standpoint, pure wholesalers add value through reduced direct product cost and a significant reduction of transactional costs. They offer pricing that is the same or highly competitive with the pricing a distributor can receive direct from the manufacturer. This allows the distributor to enjoy the additional economic and service advantages offered by a wholesaler without paying a significant premium for their products.

In terms of economic value, wholesalers reduce the transactional cost of servicing distributor customers through the power of “bundling.?? Distributors can bundle the orders for hundreds of vendors and thousands of products into a single source from a wholesaler. The power of bundling turns purchase orders, freight minimums, checks, sales calls, and receipts into one low-cost interface.

Service value for distributors is delivered through short lead times, customer service knowledge, and product selection. Wholesalers provide same-day shipping from numerous locations across the globe to offer distributors quick and easy access to large product portfolios. Low lead times equate to low inventory stocking levels for the distributor and high service levels to their customers.

Wholesale distributors also maintain seasoned customer-service personnel to assist the distributor in servicing their endusers and to interface with the manufacturer on the distributor’s behalf. Wholesale distributors offer an extensive product portfolio that enables them to provide high fill rates to their distribution customers. They often stock products not found anywhere else, and provide quick shipment for a manufacturer’s slower-moving items.

While distintermediation may have seemed a threatening reality for a short time, the value of wholesale continues to manifest itself daily. By not competing for end-user business, wholesalers can focus on supporting the best interests of the distributor with advantages that are purely unmatched.