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First Published in EOS/ESD Technology April/May 1990

Buying and Selling Static Control

Procuring static-control products can be a little less confusing
if you know "who's on first."

Randy Ford
President, Static Solutions, Inc.
Tuscon, AZ

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.

Who Makes This Stuff?

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, p. 36). 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 value-added converting. 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 heat sealing. 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.

End User

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.

The Distributor

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 bid.

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.

The Manufacturer

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 charges.

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

Functional distribution

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 the customer.

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."