By Bridget McCrea
LEDVANCE's Matt McCarron provides an update on the firm's carve-out progress and emphasizes the importance of having strong distributor-supplier relationships.
When NAED set out to talk to hundreds of distributors and manufacturers last year about their relationships, we dug up some pretty interesting dirt on what really goes on behind the scenes in supplier-distributor partnerships. In fact, we learned that many of these alliances aren't really "partnerships" at all, but rather one-way streets that are paved with very little communication, collaboration, and input. Simply put, both sides have a long way to go when it comes to creating and cultivating strong relationships among each other.
According to the Reimagining Distributor and Manufacturer Relationships survey of 246 NAED companies (102 distributors and 144 manufacturers), for example, a full 91% of participants said there is a real need for manufacturers and distributors to reimagine how they can better work together and more collaboratively. The survey also found that a higher percentage of distributors believe manufacturers are not prepared (i.e. mindset, culture, strategies) to partner, and that the opposite is also true in that more manufacturers than distributors believe distributors are not prepared to partner.
About 63% of NAED distributors surveyed believe that their manufacturers are "actively involved" in creating partnerships with distributors, yet 37% of all NAED distributors that enter into relationships with manufacturers believe that those relationships have little chance of becoming truly collaborative partnerships.
Breaking the Mold
Some manufacturers are breaking the mold and doing more to shore up their distributor relationships, collaborate with their distribution networks, and create a win-win scenario for themselves and their partners. In Anatomy of a Corporate Carve Out, for example, tED magazine put the spotlight on the newly-formed LEDVANCE, LLC, a general lighting lamp manufacturer that was "carved out" by global lighting manufacturer OSRAM. The new firm is handling traditional lighting, modern LED lamps, standardized over-the-counter (OTC) luminaires, and connected and intelligent lighting solutions for smart homes and buildings.
As part of the carve-out process, Matt McCarron, VP of LEDVANCE's Industrial Commercial Channel, says OSRAM put much thought and care into exactly why it needed to happen, how to go about doing it, and how to incorporate the manufacturer's distributor base into the process. Knowing that these types of major business shifts can present both challenges and opportunities for the companies that are out on the front lines selling the manufacturer's products on a daily basis, McCarron at the time said LEDVANCE took this into consideration early in the process and continues to work with its distribution base during the transition period.
Knowing that strong business relationships don't just formulate overnight, McCarron says LEDVANCE continues to work to create and cultivate strong bonds with the distributors that sell its products. Here, McCarron provides an update on LEDVANCE's progress on this initiative and shares his insights with distributors and suppliers that want to do a better job in this area during the year ahead.
tED magazine: How is the transition to LEDVANCE going for your company and its distribution base?
Matt McCarron: The SYLVANIA brand has a century of history built on our relationships with our partners. Several years ago, we formed the Distributor Advisory Council (DAC), which brings together our distribution partners to have honest conversations about the market, their needs, and how we can work together more effectively for shared growth. Part of the reason why the DAC has been so successful is because it is built on mutual respect and transparency. We want them to succeed, and they want the same for us. The element of trust is the cornerstone for both sides. We are honored that members see the value in the discussions and give up their valuable time to participate. It is something we greatly appreciate, and we take their advice to heart.
tED magazine: What issues or topics does LEDVANCE talk to its distributors about?
McCarron: At our recent DAC, topics included our company name change from OSRAM SYLVANIA to LEDVANCE, the future of the SYLVANIA brand, and what it would all mean for our partners. It is important to hear their thoughts and perspective on our strategy, and for us to communicate that the things they counted on us for decades, such as the SYLVANIA brand and quality, won't change. These meetings also provide a great platform for open two-way discussions on industry changes like operating with greater speed. It's really all about helping each other be positioned for long-term success in an ever-changing marketplace.
tED magazine: Knowing that not all supplier-distributor relationships run smoothly, why does LEDVANCE put such a strong emphasis on this initiative?
McCarron: This is a competitive marketplace with a myriad of competitors. The need for strong customer relationships is more important than ever. In the lighting industry, distributors are not just looking at the "Big Three" manufacturers anymore. There are numerous suppliers from all over the globe trying to get their business. We want our products and services to provide the right value now, and for our strong relationships and alignment with our partners to provide value in the future. It is about bringing together the insights of both sides that can create a clear picture of what's to come down the road.
tED magazine: What would you say to the electrical supplier or distributor that wants to do a better job in this area in 2017?
McCarron: Both sides need to come in and really have the freedom to talk honestly and openly about the business environment. You have to be prepared to expose yourself, and to listen to critical opinions, thinking, and positions. The good news is that you don't really have to commit to something like a DAC to be able to improve your relationships. Just ask and listen. One of the great things about this industry is that we are all passionate about our businesses. People are invested in their companies, dedicating decades of their lives to its success, and supplier/distributor relationships go beyond the professional four walls. It is precisely this principle that creates a feeling of "winning together," which is actually one of LEDVANCE's core values. Ask your supplier or distributor what can be improved so you both win, and honestly listen, even if you don't like what's being said. It may sound simple, but if you don't start with those two things, the relationship can't grow.
McCrea is a Florida-based writer who covers business, industrial, and educational topics for a variety of magazines and journals. You can reach her at firstname.lastname@example.org or visit her website at www.expertghostwriter.net.