The Distributor Service Model: Evolution or Revolution?
As I See It…
Distribution Services can no longer be considered a minor element in the bag of tricks for the average industrial distributor. These days, industrial distribution is quickly moving towards a “service first” model.
As this revolution gains momentum, many technical-based distribution companies will work with their customers in a very different manner than component-based wholesale companies. Motion control distributors view SERVICE as their core competitive advantage, making a switch from the traditional distribution process of buying and reselling select manufacturer’s components.
Making the switch from Component-based to Service-based
Because the service-based business model requires distributors to provide a very different set of skills and value-added capabilities, our industry is experiencing a shortage in the very skill sets required to be an effective technical services provider. The most desired areas of expertise aren’t normally found as an integral aspect of the distribution networks, particularly with niche or market-driven distributors. To become a successful technical service provider you need to consistently demonstrate expertise and capabilities that far exceed your customer’s… and your competition.
Today, many customer relationships start out utilizing technical services. Over time, those customers end up recognizing the value in a service provider with the flexibility to provide distribution as just one element of their overall offerings. They’re looking for hydraulic, pneumatic or electromechanical design and installation services. What’s different is now, service offerings have become the entry point of the customer relationship. The Distributor service model also adds huge value for the vendors by pulling through core traditional buy and resell distribution services as part of the customer relationship.
We’re seeing new interest in a wide variety of service-based solutions, from fluid filtration to preventive maintenance on specific high production value areas of machinery and mobile equipment. We’re also finding that outsourcing key engineering design on specific capital equipment programs, or the redesign of older equipment, remains an extremely valuable on-demand service. This provides customers with reduced maintenance and cost-avoidance strategies, and that’s always desirable. Providing mechanical or electrical component repair services for MRO customers with diagnostics is another recent trend for the service-based distributors.
A more traditional aspect of the distribution service model is logistical and procurement services. They can reduce the total cost of ownership through vendor consolidation or providing vendor-managed inventory services.
So, what should you look for in a hydraulic service provider?
- 24-hour availability
- Technical and engineering expertise
- Dedication to fully understanding the customer’s goals
- A broad knowledge of mechanical equipment and controls
- Strong focus on safety and reliability
More and more, customers are looking for a combination of engineering and installation services. They need us to have the flexibility of providing engineering and design right on the job site. It’s become essential, especially in time-limited situations like scheduled shutdowns.
Today’s fast paced manufacturing requires distribution with the ability to provide a wide variety of technical, service-based solutions. It’s all about providing customers with global products and delivering them with world-class service.
To learn more about the RG Group’s services please contact me directly at [email protected]
Find us on the web at www.rg-group.com