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Middlemen hold on to crucial role

The demise of the distributor has long been predicted. It was trumpeted when the internet sprang from nowhere, and promised a direct and immediate communications channel between suppliers and customers.

It was heralded when the fashion for direct sales took off a few years ago, and many manufacturers began setting up ‘direct sales’ teams. Remember that?

Academics even coined a new word for it - disintermediation - which translates, more or less, as ‘the death of the middleman’.

The online revolution has indeed provided a new channel to customers. However, its greatest impact has been felt in the business-to-consumer market, with retailers such as Amazon building mighty online businesses.

In our sector, the traditional offline supply route is still how people do business. Why?

The truth is that the design, installation and servicing of building services systems is a highly technical activity. We are not selling CDs. Products are complex and no two applications ever quite the same. The variables may not quite be infinite, but it certainly seems like that at times.

Faced with this complexity, good advice and expert technical support are paramount. Timely advice or a wise steer can save a contractor a fortune - literally - in time and money.

This open channel is only possible if people are talking directly to one another about what they are doing and what they need. The distributor’s role in providing this expert support to the trade is, I believe, one of the reasons ‘disintermediation’ hasn’t occurred.

The other reason distributors have not disappeared but continue to thrive is, I believe, that their traditional role as ‘middleman’, as someone who simply breaks bulk, is being radically redefined.

A new type of distributor is emerging that goes beyond the traditional model, providing customers with added-value services that enable contractors to better meet the needs of their own clients.

I would include here the design and offsite assembly of modularised total building services solutions for buildings, prefabricated pipework for major projects and custom-built air conditioning and refrigeration plant. Such added value services are opening up a new frontier and helping to drive the industry forward.

At a time when pressure has never been greater to cut costs, improve quality and shorten lead times, forward-thinking distributors, positioned in the centre of the supply chain with deep technical knowledge, are uniquely placed to deliver the added value services the industry needs.

Scott Craig is sales and marketing director of Pipe Center and Climate Center