The changing objectives of supply chain buyers and the Internet have combined to erode the value of traditional, product-pushing, channel reps. In today’s world, the challenge for reps will be in adapting and acquiring new skills before they fade away.
The Trends and Current Realities
Since 1980, there has been a huge and ongoing reduction in and consolidation of factory reps in all major channels. The 1990s first saw the behemoth Wal-Mart change the game when it requested that suppliers switch out area reps working on commission for executive-led supply chain teams with the power to enter into new collaborative supply chain solutions.
Integrated sole supplier (ISS) buying became the norm in the drug, retail hardware, retail grocery and hospital supply channels, and the days of distributor reps making their routine calls for commissions gave way to consultants on salary, working as part of a team. This is still the trend in many channels.
However, the cost of a sales call continues to rise, and now accounts with less than $5K per year in margin dollars can’t support routine calls and still be net-profitable to the distributor.
In addition, the Internet as eroded some of the traditional roles of reps as customers can now access account information, educational information and product knowledge, as well as analytical and ordering tools 24/7.
In addition, customers can research competitor’s prices like never before, easily use replenishment tools like Alexa/Echo from Amazon and receive instant news alerts from bots about new or niche products, well before a rep can show up to present it.
Reveal Commission Costs To Customers?
Traditional reps would never want their biggest volume customers to know how much they make in commissions that are bundled into the price of the goods. As Wal-Mart figured out, big account commissions are way in excess of the value delivered by the full-service rep.
Yet, supply chain and ISS contracts continue to grow with transparent, a la carte, service costs. And, Amazon sells commodity, commercial products for less, because they have no outside or inside sales reps. Some customers may pay more for the traditional rep model, but millennials don’t want inside or outside reps 9-5. They want to do it all 24/7 on their mobile devices.
Time To Learn Supply Chain Selling Skills?
Besides legacy skills, why not also learn supply chain math skills for key account needs? How? Click here to find out!