Our CEO, Greg Leidner, joined Moderator Jason Bader, principal of The Distribution Team and columnist for The Wholesaler magazine, and fellow panelist Lewis Finn, CEO of Control Supply Corp., to discuss why there may be a reluctance from distributors to partner with master distributors to fill orders, how these partnerships have changed over the years, the benefits they offer now, and more! Watch below, and read the key takeaways.
Key Takeaways:
- Master Distributors are wholesale or no sale and exist to bridge the economic gap between manufacturers and wholesale distributors. This model allows manufacturers to focus on their core excellence, which is cost-efficient manufacturing in large quantities.
- Master distributors order large quantities, break them down, and sell them to wholesale distributors in smaller amounts, allowing manufacturers to cost-effectively service corners of the market they wouldn’t otherwise penetrate.
- Master distributors price based on volume and ease of serviceability, much like a wholesale supplier would. But, this helps wholesalers invest less in inventory and allow everyone to benefit economically by having a buffer between them and manufacturers. Small, medium and large distributors have access to our wide range of products and large inventory. Everyone, at some point, will need assistance with their stocking position, and we’re here to help with fill-ins and other orders.
- Master distributors help get products to market faster and help wholesale distributors make more frequent turns.
- Master distributors can help mitigate supply challenges by allowing wholesalers access to extensive inventories even in a low supply scenario, like what we’re experiencing now. When products are scarce, we allow wholesale suppliers to be more immune than they otherwise would be to these supply chain challenges. On the logistics side, even if manufacturers had product availability, it’s still challenging for them to fulfill orders to a large group of wholesalers due to a lack of trucking availability. We have our own fleet of trucks and our own drivers that give us shipping flexibility. This model removes the red tape of shipping out complete orders on the same day.
- Because of volatile market conditions, master distribution allows wholesale suppliers to navigate price inflation. Nobody knows if prices will continue up, stay stable, or start to fall, but we can provide economic value to distributors by mitigating their risk on inventories. By utilizing a master distributor for lean inventories, distributors will have less high-cost inventory in stock if prices fall. Let us stock the materials that you turn less frequently and deliver them to you when you need them. Plus, as manufacturers provide fewer rebates and tighten terms, it is more cost-effective to buy from master distributors. We have lower minimum order requirements for free freight allowed (FFA) and value-added services like jobsite deliveries. We help independent wholesalers with less than truckload (LTL) orders, allowing them to avoid tying up cash flow by meeting truckload minimums required by mills.
- As our customers grow, whether through acquisition or expansion, so are we, along with the appeal of master distribution. From an expanding footprint of distribution centers across the country, we can service many, if not all, distributor locations. We can support the growth of wholesale distributors, allowing them to take on new opportunities in new markets.
- Master distributors may have higher pricing, but the model still benefits the bottom line for distributors. With our just-in-time model, wholesalers can carry smaller amounts, or no riskier inventory, especially when it comes to commodity pipe products, where prices may go up, go down, or stay the same. In two of those three scenarios, wholesalers are better off having less inventory than more. By being able to break bundles and order less from us, wholesalers can avoid carrying excess inventory.
- Master distributors provide value to both manufacturers and wholesale suppliers. Our warehouse space and strategically located distribution centers allow mills to reach more wholesale distributors around the country and for wholesalers to manage their inventories, especially in times of volatility and scarcity.
How we can help:
Merfish United’s business model – which enables wholesalers to buy a broad array of pipe products from one supplier, at low minimums for FFA – is designed for low and unpredictable volume scenarios, exactly like the one we are in right now. Call your representative now to schedule your next weekly delivery of mixed-and-matched pipe products.