The Expanding Role of Services

A common underlying problem is that distributors often have only a limited understanding of the true costs of providing individual services, let alone their ultimate profitability.

In far too many instances there also remain disconnects among (a) the costs associated with delivery of the service, (b) the customer or supplier's perception of the value the service delivers, and (c) as a consequence, the revenues and margins realized by the distributor from the service.  A common underlying problem is that distributors often have only a limited understanding of the true costs of providing individual services, let alone their ultimate profitability.

Wholesaler-distributors must take three decisive actions to overcome this issue: (1) get much close to customers to understand their processes and service needs, thereby becoming a truly collaborative business partner; (2) develop a services strategy that is adopted and understood company-wide; and (3) actively manage their product and services portfolio to ensure they are providing the right solutions at the right prices with the right profit margins.

ACTION POINT: Become part of your customers business process.