Independents’ Day
Losing lines is inevitable, but smaller dealers can maintain their unique mission in the market.
It’s a fact of American corporate life - and the dental industry is no exception: Large manufacturers can, will and do "rationalize" their supply chains. In plain English, that means they cut the number of dealers with whom they work. Their reasons vary. Perhaps they feel that some dealers aren’t up to snuff from a systems point of view; or maybe they’ve crunched the numbers and figured it’s simply more cost-effective to sell through fewer dealers.
Regardless, the impact on small distributors of losing an important line can have a snowballing effect. The loss might make them less attractive to their customers, not to mention top-performing sales reps.
That’s why small dealers must confront a simple but daunting question: "How do I remain a viable player in the supply chain?" The answer, according to those with whom First Impressions spoke, is just as simple: "Successful dealers offer unique value to their dental customers, and never miss a chance to let their customers and their manufacturer partners know it." Such a strategy may not shield them from losing lines. But it can help them improve their position in the market.
To be sure, small dealers offer plenty of advantages to big manufacturers. They’re nimble and flexible, and they often have long, strong roots in their communities. In addition, a local distributor can fill vital geographic gaps for manufacturers. On the other hand, smaller players lack the market impact of their much-bigger competitors. Their information systems may not be as sophisticated, and they may be hard-pressed to meet fill-rate demands of their customers. These are the factors that manufacturers weigh as they pick their partners.
Looking for unique value
"We look for dealers who bring unique value to their sector of the market," says Chris Holden, president, Heraeus Kulzer LLC. "Our strategy with distribution has been consistent," he says. "We use our distributors as A/R points, logistics facilitators and as key communication partners with our end customers, the dentists."
The way that small dental distributors can maintain and enhance their role is no different from that of any small company facing big, national competitors, continues Holden. "They have to define themselves in a unique way. They can’t be the giant in the industry, nor can they pretend to be." But they attract and retain customers by carving out a niche for themselves.
It’s true that small dealers may lack the market impact of big companies, he says. Even so, "we have dealers that are interested in helping us build our business in particular sectors. That makes for nice strategic relationships." Smaller dealers offer another advantage to manufacturers, says Holden. Mindshare. "It’s really about bandwidth."
Finally, says Holden, small dealers are on a level playing field with the big companies in what might be the most important factor of all - building customer relationships. "Dentists buy from people they know and trust. My own experience co-traveling with [distributor] reps when I carried a bag was that they represented themselves first, company second, portfolio third. Relationships matter."
Lori Paulson, vice president of marketing and dental programs for Nashville, Tenn.-based NDC, agrees. "The independent dental dealer represents the heart and soul of American business. And they mirror the dental profession in so many ways - in their relationships, in being there to serve the dentist. It’s the same reason why the dentist is there - to serve the community."
On a mission
Like all manufacturers, Newberg, Ore.-based A-dec is selective about the distributors with which it works. "Our strategy is about limited distribution," says Paula Vogel, corporate communications manager. "We select the dealers we want to work with, and we have a consistency with them in our policies and working relationships, whether they are large or small." That said, "maybe we’re unique in how we enjoy our relationships with some of our independent dealers," she adds. Being a family-owned company - albeit a large one - may be part of the reason.
A-dec insists that its dealers have a strong sales and service force in place. "It’s critical for our doctors and dental teams to have that service available," says Vogel. A-dec also asks that its dealers have business facilities with equipment showrooms.
The distributors on which A-dec depends most heavily are those that are sure of their unique mission in their territories, says Vogel. "Every business has a personality. If you know what attracts your best customers to you, you will keep your business viable." That’s why, when developing marketing programs with dealers, Vogel asks them to describe to her their very best customer. She asks them, "Who are the people who you really enjoy working with, who hit the sweet spot of what you do really well? Let’s work together to match product and service solutions that enhance their prosperity."
Sustaining a loss
Despite their best efforts, most if not all distributors lose a line from time to time, smaller dealers perhaps more so than larger ones. It’s how they respond to such a loss that distinguishes them from the competition.
"My expectations of independent dealers have become higher over the last five to 10 years," says Holden. The reason is, those still in the business are tougher than ever. "And the requirements for them to continue to become better are even higher," he adds. "They have to continue to present more value every day."
That’s exactly what Midway Dental Supply in Lake-ville, Ind., attempts to do. The loss of a major line a couple
of years ago literally sickened Sales Manager Dawn Metcalf. She worried about the future of her company, and she wondered how customers would respond when their rep told them that Midway no longer carried the line. "But we did it," she says. "We went in and had candid conversations with our customers about the situation." Metcalf learned that years of service and trust can trump product preference. "Over and over, doctors told us, ‘As long as you can sell me an equivalent product that costs the same or not too much more, I’m fine,’" she says. In fact, some Midway customers came back later and thanked the company for introducing them to new products and helping them save money in the process. "[The loss of the line] forced us to be better salespeople," says Metcalf. "The doctors told us, ‘You not only saved us money, you gave us these products, and we like them better than the old ones.’"
Though Midway weathered that storm, the company - like all distributors - is in a precarious position, says Metcalf. What if it were to lose one of the product lines to which it converted its customers after the last loss? Absent any guarantees, distributors such as Midway have no choice but to keep selling smarter and harder, not only to their customers, but to their vendors too.
"I’m the last independent in this area," says Metcalf. "I love having the conversation with doctors, ‘What would you do if Midway weren’t in this market?’" The question gets them thinking about the value Midway brings them. Regarding vendors, Metcalf believes "the best thing they can do is diversify where they’re putting their support. I don’t think vendors need to put all their eggs in one basket, just as the doctors don’t need to." And there’s good reason vendors should continue to work with small independents.
"One thing I hear over and over again from large vendor partners, as well as the small ones, is, "It’s so refreshing to work with you guys,’" she says. Small companies are quick to make decisions, and key decision-makers are easily accessible. "There’s also the time factor. Vendors can call us on a few days’ notice and ask, ‘Can we put together this promotion?’ ‘Can we get on your sales meeting?’ We’re flexible, we can turn much faster, and that gives us an edge in the market."
Quick to respond
Matt LeVasseur, owner of Midwest Dental Equipment and Supply in Wichita Falls, Texas, agrees. "We’re fast to react to a plan," he says. "A vendor may visit with us, and in a day or two, we might have a program up and running. We don’t have that extra layer of management, and we can really get behind the program."
Midwest has avoided several cuts over the past two years. Keeping these lines while others lost them has strengthened the company’s stature in the industry, says LeVasseur. But regionals such as Midwest play a vital role in the supply chain, he says. For example, they can provide a manufacturer strong regional coverage in areas where the bigger firms are weak, or where their sales reps have a particularly strong relationship with the manufacturer reps. They have strong, longstanding relationships with the dentists in their communities. "We can bring to the doctor what they really want and need," he says.
It’s true that independents lack the dollar impact that a national company can offer, says LeVasseur. "So if a vendor is looking to make a leap of 20 percent in sales across the board, they can’t make it with a regional player." What’s more, small companies with just one distribution center may face some challenges in meeting dentists’ fill-rate expectations.
"The way we combat that is to be on our game, work with our manufacturers, and as a small independent, try to make the impact we can on a regional basis."
|
|
|
