Supply Chain: Getting Closer to the End-User
With Tim Seims, linkedin.com/in/timseims
If you want to grow your business and streamline your supply chain to improve customer experience, internal employee experience and increase profits, you need to get closer to the end-user. This is not for the faint of heart – when you reduce friction, you increase conflict.
The Build Perspectives podcast shares insider knowledge to build connections and community in the building materials industry. Tim and Carolina are friends, colleagues and former coworkers who love the construction industry and their clients, and want to share their passion and insights to attract future talent to the industry.
In this episode, Tim and Carolina talk about supply chain: where the conflict is, what the challenges are and how you can begin to solve them to grow your business.
When you Reduce Friction, You Increase Conflict
Tim has a saying, “When you reduce friction, you increase conflict.” What does this mean?
Well, when you’re developing a product or service, the two main things to keep in mind are: what’s the end that you’re trying to accomplish for yourself and what’s the end your end-users are trying to accomplish. And when you introduce intermediaries (dealers, distributors, box stores) to that, it adds friction but reduces conflict because you, the manufacturer, are separated from the questions.
However, look at it from the other way. When you have a closer dealing with your end-user, the intermediaries get worried. When you reduce the friction — i.e. get closer to the end-user — you may be cutting some people out of the process, even the deal, or so they perceive. And just because you are making life easier for you, the manufacturer, it doesn’t necessarily mean you are making life easier for the end-user.
The De Facto Standard
Historically, most manufacturers have used intermediaries. If they are good partners, with good leadership, it’s very effective because your boots on the ground are exponentially bigger. You get to use their sales team and their knowledgeable experts. However, the challenge comes when those intermediaries are either ineffective or block your efforts to make the end user customer experience better.
They can take away your control. Especially when it comes to pricing.
Most people look at using intermediaries as the de facto standard. This is especially true if you are new to the market, either coming from another country where you’re established or if you are introducing a new company with a new product.
Your options then are to either try and market and sell and ship the product yourself OR to partner with an established distributor who can help with the marketing, stocking and selling. This can be great, but it can mean that you can’t control your messaging.
Content and Information Distribution
When you are working with third (or fourth or fifth) parties, you have to realize that everyone has a different content distribution method. Some might have a newsletter, some might rely more on social.
And they’ll use different vernacular, depending on where they are located and their history. So from a brand perspective, you’re getting a broader distribution chain, but you’re not getting the focus and consistency you might want or need for your product.
While you do want people to know and love your product, and to share and talk about it, you won’t be able to control the branding language they use, which can affect SEO and might not be in line with your company’s culture.
You can only infuse your brand language at a certain level with your distributor partners because they also have their own culture and language.
It can also lead to a breakdown in communication. For instance, NichiProducts are only available in the Southeast. NichiProducts are only one part of Nichiha’s offerings. But like the old “telephone game” this message can, and has, easily been misconstrued as it goes down the supply chain to all Nichiha products are only available in the Southeast or that NichiProducts isn’t available at all anywhere. It leads to a confusion over the availability of different products.
Depending on your supply chain, you can easily have a breakdown of communication, where your message gets diluted or misconstrued. And this can cause challenges and friction for the end-user who gets confused about your brand and products.
If you control the supply chain of information, you also control the message.
Controlling Content
You want to be able to control your SEO so you can reign in all your backlinks. You can also focus your paid and organic search on specific things that are going to drive your business, instead of relying on distribution partners who may not have your best interests at heart. And that’s even if they have an SEO strategy or content, which isn’t always the case.
Plus, you can control user-generated content (UGC), i.e. when end-users share posts and blogs about your product. You can endure that the UGC is being utilized properly in a way that helps your company. It also helps you figure out your sales funnel.
If you don’t know how to use SEO and digital marketing, you should find a marketing agency that can help you. Tim and Carolina both use Venveo, who specializes in building materials manufacturers, but there are other agencies out there as well that you can look into.
Getting Closer to Your End-User
Many people think they need to sell directly to get closer to their end-user. However, that’s not always the case. There are three ways to get closer to the end-user, from a channel side.
One is through content, figuring out who your end-user is, that avatar and then speak to them through everything you’re doing.
Two is by publishing your pricing or allowing some way for people to easily get answers to their top questions, such as availability, pricing, where to buy. This empowers end-users to get the information they need and make decisions on their own.
Third is looking at your manufacturing flow. How do you source your materials, how do they move from point A to point B, then how do you manufacture it, and lastly, how do you get it to your client or the end-user.
One of the big challenges in the building industry and why manufacturers engage distributors, even if they have the ability to handle everything else, is because they need them for logistics and AR, which is a powerful and compelling reason.
Finding the Friction
The biggest part in disintermediating the supply chain is figuring out where the friction is that’s most plaguing your end-user.
To do that, first, you need to know who your end-user is, your ideal client persona, ICP or your avatar, know what their pain is and then what one thing could you address for that client this year? How would you go about it? Is it the distribution part? Is it the content flow or is it logistics? And once you identify that, then you have something actionable.
And don’t’ forget, once you’ve addressed the problem or pain point, to go back to your ideal customer and say, ‘Hey, we’ve fixed this. Let us know how we’re doing now.’
If you don’t get close to your end-user, you’ll never know where the pain points are and you’ll never be able to fix them. Without reducing friction and pain points, you’ll never be able to scale or grow your business.
Plus, by getting close to the end-user, you’ll be able to get insights into future trends. Yes, the people in the middle — the installers, the GCs, the suppliers — they’re all important and you want to be close to them to be able to take care of them. But all conversation is driven by the end-user. If you don’t know what they want or what problems they have, you’ll never grow or have a smooth supply chain.
Join the Conversation
We’d love to hear your thoughts on this week’s episode! Shoot us an email at buildperspectives@gmail.com.