First Published in EOS/ESD
Technology April/May 1990
Buying and Selling
Procuring static-control products can be a little
if you know "who's on first."
President, Static Solutions, Inc.
Watching the players in today's static-control
products industry is like Abbott and Costello's "Who's On First?"
-- at least one of the participants walks away with more questions
than answers. In the meantime, everyone struggles to make the best
of the situation.
If you have been a victim of such things
as poorly written specs, ex-postfacto performance requirements,
exaggerated claims, or simply poor quality, you know what we a are
talking about. You are also a member of an embarrassingly large
fraternity. However, a high percentage of these woes are self-inflicted,
and while such experiences are common, they aren't inevitable. A
little effort to improve communications and a commitment to be the
"best in class" can transform the ESD-products marketplace
into a more satisfying place for both buyer and seller.
Technology or Technique?
Today's materials technology has a
pretty good track record. Among the products available are some
excellent tools for solving static problems cost-effectively. Plastics
and polymer technology have led the field with some exciting innovations.
New-product development is tackling problems which have plagued
the industry for years, and it's a sure bet that there will be more
and better products to choose from in the future.
When problems do occur, it isn't usually
technology at fault. More often, it's the way the technology is
applied or distributed that creates the predicament. After years
of experience, it's about time for manufacturers, end users, and
distributors to get their collective act together.
Static-Control Products Distribution
One good way to start improving is
to look at how things are done today and the obstacles that result.
Numerous minor variations exist, but the scenario below is true
for about 80% of today's ESD sales volume.
When a customer has as ESD problem,
they will often contact a manufacturer or distributor to help find
a solution. The customer's choices will be narrowed until one solution
is selected. The static-control materials are purchased, and a procedure
is implemented for their use. The materials are usually sold through
a distributor to the end user.
When this approach is properly executed,
it can be an "everybody wins" deal: the customer's problem
is solved, and the vendor gets some business. However, some projects
are undone by the participants' lack of awareness of the realities
of the marketplace and how these can skew the choices. One of the
ways disaster can be avoided is by understanding who the players
are (see sidebar) and the different perspectives that each participant
uses to view the world.
|Ever wonder who really made
the static-control product you just purchased? If you have,
you're not alone. The actual source of many of the products
in today's static-control market can be a point of real confusion.
The traditional notion of a manufacturer is a company that combines
purchased raw materials and components into finished goods for
ultimate sale. But in reality, companies often will purchase
finished products for repackaging and resale under their own
brand name and warranty.
This practice of private-label branding is widespread in products
from chemicals, wrist straps, and instruments to static-shielding
bags. Virtually all full-line static-control products manufacturers
use some private-label product to round out their line.
It is not simply the combination of internal manufacturing and
private-label branding that produces confusion for today's end
users. It is the nature of the distribution system itself.
For example, one well-known manufacturer of ESD worksurface
material has for years produced and sold their product through
distributors. At the same time, several full-line static products
manufacturers purchase and privately label the same material
for resale through their own distribution networks. In some
markets, the same distributor carries the same product under
different name brands.
To complicate things further, both of these materials, identical
except for brand name, might be tested at a major electronics
firm. And one might pass and the other fail!
This type of conclusion has not tickled down to the local distributor.
Many are now purchasing materials direct from primary manufacturers
in bulk and converting them to finished form in their own facilities.
When reading trade journals, even having a scorecard may not
help. Several industry publications publish Buyer's Guide issues
for ESD products. In every case, primary manufacturers were
side by side with master distributors and convertors with no
way to distinguish between them. (Editor's note: The EOS/ESD
Technology Buyers' Guide provides separate listings for manufacturers,
convertors, wholesalers, and consultants. See June/July 1989,
Below is a suggested system of designation that may cut
some of designation that may cut some of the confusion on this
issue. While not fool-proof, some useful means of identifying
who does what is desperately needed.
Primary manufacturer: Generates about half its sales
from products produced internally or which have substantial
Manufacturer: Generates the vast majority of sales by
purchasing bulk material and transforming it into finished products
through operations such as cutting, slitting, laminating, or
Master distributor: Generates half or more of sales through
resale or private branding of product. Also sells to a network
of other (generally smaller) distributors.
Distributor: Generates the vast majority of sales through
resale of purchased product to end users.
The industry has to find a way to help customers understand
the role of each supplier. When companies try to be all things
to all customers, nobody wins. The question of when a manufacturer
is really a manufacturer must be addressed. Otherwise, end users
are fated to continuing confusion and will have to take their
best guess. I wish them luck.
Walk a Mile
There is an old Native American proverb
that says the best way to understand another person is to walk a
mile in their moccasins. Those who manufacture, distribute, or use
static-control products all have some common goals as well as some
that are unique to their needs. A look at the goals and key concerns
of the end user, manufacturer, and distributor will help each to
more intelligently meet his/her own objectives.
The end user is clearly the most important
participant in the process. Without him or her the others have no
legitimate purpose. End users commonly have four basic objectives
when it comes to static control. They are: 1.) To design sensible
ESD-control programs which meet their company's and customer's needs,
2.) To sell those programs to management and employees, 3.) To solve
day-to-day ESD problems, and 4.) To stay abreast of what is available
in the industry.
Virtually all key job elements for
the static-control professional fall within these four objectives.
Even the procurement function comes under the scope of these goals.
If buying of materials to support the program isn't possible using
normal purchasing methods, then the effectiveness of the program
itself is in jeopardy.
The key concerns that affect the end
user's choice of solutions are many. They include product quality,
product performance, ease of use, application support from reps
and distributors, and the stability of the local distribution network.
Suppliers who can help customers meet these goals in a reasonable
manner can create strong long-term partnerships.
Distributors are more involved with
end users than are manufacturers and should have a clearer picture
of their needs. Successful distributors have one main goal, that
is, to properly service the customer with products and services.
Therefore, many key concerns that influence
distributors are similar to the end user's. Product quality and
performance are primary here, too. Nobody wants to sell something
that creates other problems and results in an unhappy customer.
Distributors also are concerned about
the level of application support the manufacturer offers. The distinction
between what level of local application support should come from
the manufacturer and what level should come from the distributor
keeps their goal of servicing the customer, then their job of customer
advocacy isn't complete until all the problems are solved and questions
answered. And the better the distributor, the more questions they
should be able to answer directly without requiring lengthy delays
querying the manufacturer
Distributors do have some different
concerns than those of the end user, however. For example, profit-margin
opportunity from a given product is a major consideration. A product
may perform very well and be priced competitively to the end user
but if the distributor cannot make a certain minimal profit, his
interest in the line will be limited.
Likewise, the number of competing distributors
carrying the same line will have a major impact on distributor interest.
A great product can be a marketing disaster if purchase quantities
are too high or margins erode due to too many local sources for
the same product.
Another concern of distributors is
the end user's procurement practices. Many distributors have worked
to help a customer solve a problem or evaluate a product only to
find that this information has been turned into the core of a competitive
The issue is not whether a distributor's
efforts warrant the award of the business on a sole-source basis.
Instead, the question is one of the fairness of this type of practice.
The comparative evaluation of ESD solutions can be a costly process
for a distributor. When a competitor who has little or no investment
in the sale up to that point is asked to bid based upon detailed
requirements, they can often price the product lower because they
have no initial expense to recoup.
So long as customers buy with a disproportionate
emphasis on price, good distributors who can support the specification-approval
process will invariably lose business to competitors with lower
overhead and little or no technical service. It may be worthwhile
paying a few cents more in order to assure that a good distributor
stays in business.
A final distributor concern is important
but often overlooked by manufacturers. Most products come to market
through distributor inventories. Therefore, the manufacturer is
actually making two sales when the product is sold-- first to the
distributor and second to the end user.
Both sales are vital. The manufacturer
who loses sight of the fact that their distributor is a customer
too will never achieve the kind of distributor loyalty they need.
Distributors need to know that their suppliers will treat them with
the respect due any customer.
Producing for today's ESD-control marketplace
requires a solid commitment to the needs of the customer within
an industry that is rapidly changing. It's no exaggeration to think
of this as trying to hit a moving target. One executive of an established
primary manufacturing firm recently compared it to trying to shoot
down a low-flying jet from the roof of a fast-moving truck on a
bumpy, winding road.
Manufacturers have a simple mission.
Their products are intended to service the needs of the end users--
usually through distributors. These products prevent the build-up
of static charges or provide a way to control or eliminate these
This simple mission results in a marketing
puzzle that contains multiple, and sometimes competing requirements.
Key concerns about a product might include:
Product quality and performance to specifications
Conformance to industry and military standards
Marketability with an adequate return on investment
Cost-effectiveness for the customer
These five variables form the core
of the manufacturer's marketing plan. With the right balance of
product design, quality, and customer feedback, a marketing plan
will produce good results.
The manufacturer is also concerned
with the ongoing relationship with local distributors. It is interesting
to note that the concern over procurement practices between distributors
and end users also applies between manufacturers and distributors.
To foster better relations, many manufacturers have programs of
distributor training and use incentives that are designed to encourage
the type of partnership necessary for their mutual success servicing
What's in Store?
There is no magic formula for making
the design manufacture, evaluation, purchase, and sale of static-control
products easier. However, a little knowledge about how suppliers
and customers can mesh their requirements will be beneficial to
both. Their individual needs and common objectives can provide a
solid foundation for the growth of the industry. It doesn't have
to sound like "Who's on First."