Industrial automation is changing fast, and how products reach end-users matters, affecting efficiency, support, and value.
When purchasing products to automate your facility, you typically encounter manufacturers and distributors.
A distribution model that has not yet been highly adopted is the limited distribution model, which is exemplified by Rockwell Automation. This approach assigns a single distributor to a specific geographic area, reshaping the landscape of industrial automation supply chains.
Unlike traditional models that prioritize availability throughout multiple channels, the limited distribution model focuses on creating meaningful partnerships between manufacturers, distributors, and customers.
At HESCO, we are the authorized Rockwell Distributor in Connecticut and have been since 1941. In this article, we will explore how this model works for Rockwell Automation, and how it is driving innovation, expertise, and customer satisfaction.
Whether you make, sell, or buy industrial automation products, understanding this model is key to optimizing your supply chain strategy.
How the Limited Distribution Model Works
The limited distribution model puts customer experience first. But how does it work?
In industrial automation, you have countless product options. This model ensures you get genuine, current products, not counterfeits or old stock.
Distributors get exclusive rights to a specific area. They’re the only authorized Rockwell Automation seller in their region.
This partnership comes with rules. Distributors must meet sales targets and follow marketing guidelines.
So, you’re guaranteed real products. But you might wonder, “What’s in it for me?”
Let’s break down the benefits for manufacturers, distributors, and customers.
Benefits for Manufacturers
The benefits for manufacturers in the limited distribution model significantly outweigh the drawbacks:
- Value Maintenance: This model helps maintain product value by avoiding price wars between multiple distributors within the same geography, preventing product devaluation.
- Operational Efficiency: With fewer distributors, manufacturers have fewer points of contact – this makes operations more cost-effective.
- Enhanced Control: Manufacturers will have more control over their distribution network. They can enforce requirements on distributors, ensuring a high level of support and service.
- Strategic Partnerships: Relationships are crucial in any partnership. Manufacturers enforce growth strategies, sales plans, and staffing requirements that help to align distributors with the commitment to support the products.
Benefits for Distributors
For distributors, the benefits extend beyond consistent revenue:
- Exclusive Rights: Distributors receive exclusive rights to sell in a specific location, allowing them to secure special pricing agreements and support from the manufacturer. For example, HESCO has had its partnership with Rockwell Automation since 1941, so our rights are exclusive.
- Improved Expertise: The need to meet manufacturer’s standards force distributors to constantly be innovative and an expert in their field. With consistent improvement in sales, marketing, and technical capabilities, they can constantly grow.
- Collaborate and Best Practices: Being a partner puts you into a community. Since each distributor has a specific APR (Area of Primary Responsibility), they can create a community where best practices and strategies to maximize profitability are shared.
- More Productivity: Sales teams on the distributor end can spend more time selling rather than competing.
Benefits for Customers
Customers also benefit significantly from this model:
- High-Quality Support: Customers receive high-quality support from distributors who are experts in the products. This includes technical support, training, and access to specialists.
- Reliable Inventory: To keep sales consistent, distributors must maintain proper inventory levels to meet customers’ needs. If you order from another website, it may take weeks to come in where distributors have inventory in-house and can ship out to you on a quicker schedule, depending on the product.
- Access to Manufacturer Expertise: Since distributors have constant contact with the manufacturer, they can connect customers to manufacturers for insights and expertise. Through Rockwell, customers receive access to product managers, training programs, and events, like the Automation Fair.
- Peace of Mind: Knowing that the products you are getting are not counterfeit and are in the original packaging.
Cons of the Limited Distribution Model
But, with every good thing comes the bad. While the benefits are substantial, there are some drawbacks:
- Higher Initial Costs: Products might have a higher initial price in comparison to their competitors. These competitors are websites that don’t have a limited distribution model, where you can order online. But, this cost is offset by the superior support and service provided. It is unparalleled.
- Broad Brush Requirements: Distributors may face challenges meeting the requirements that the manufacturer asks of them because they are broad-brushed. Meaning, that every distributor in the model has the same requirements that must be met. Sometimes this does not align with one distributor’s specific market needs.
- Customer Perception: Customers may perceive the limited distribution model as a monopolistic practice, which can lead to concerns about higher prices and a lack of options. However, they can purchase those same products from another distributor – but it does not come with the same level of support.
Despite these drawbacks, the benefits of the limited distribution model clearly outweigh the cons. The consistent themes of superior support and expertise across manufacturers, distributors, and customers demonstrate the model’s value in the industrial automation sector.
Invest in a Distributor
The limited distribution model, like Rockwell Automation’s approach, represents a significant shift in how industrial automation products are distributed and supported. This model offers advantages for all parties involved.
For manufacturers, it ensures operational efficiency and control over their distribution network. For distributors, it ensures exclusive rights geographically and increased brand awareness. For customers, there is access to unparalleled support, reliable inventory, and a direct line to manufacturer expertise.
As the world of industrial automation continues to evolve, the limited distribution model will stand out as a strategy, prioritizing long-term value and customer satisfaction.
For businesses looking to navigate the complexity of industrial automation, partnering with your local authorized distributor can provide you with products and a support system guaranteed to drive innovation and success.
If you have any questions on the limited distribution model, or if you would like more information on how this can benefit you, don’t hesitate to reach out to HESCO today!