Distributors Gain Less in the Long Run From Scaling Back

The struggling global economy has a ripple effect.

Consumer demand is down, so manufacturing has slowed and companies are laying off workers and cutting shifts.

The destructive ripple moves to distributors which supply those manufacturers.

Orders are down, revenues are down, and many distributors assume there’s nothing they can do but wait until the economy picks up.

In effect, some distributors fall back and try to re-group. They go on the defensive. They slash inventory and jobs. In many cases, bank and credit lines have been sharply reduced.

Those moves in turn degrade service levels, which ripples back to their customers in the form of longer lead times, late orders and overall a degradation in the relationship between distributor and its customers.