In an industry awash with data, the issue of POS (point of sale) information being shared to ensure independent manufacturer representatives are compensated for their efforts continues to be an issue. And with COVID significantly impacting industry revenues for many, distributors who do not properly report sales through regional / central distribution centers and manufacturers who do not accurately manage POS information to compensate their reps, are doubly impacting reps.
In 2016 NEMRA commissioned a State of POS industry report which highlighted a number of industry challenges including:
- Distributor concern (some use the “trust” word) in sharing transactional information with manufacturers
- Varying reporting formats by distributors as well as requests by manufacturers
- Reps reported that 10-40% of their income was derived from POS information
- Reps shared that at least 25% of the time they had influence on where to guide an order and would guide it to those whom they know they would compensated.
- And if you’d like a copy of the research, contact Jim Johnson, president of NEMRA, or David Gordon, Channel Marketing Group, who conducted the research for NEMRA.
And much more.
A Process for Improvement
A joint Rep / Manufacturer POS Task Force was formed. Some of their initiatives included:
- Redefining POS as “place of purchase” recognizing that distributors would be more open to sharing information at a zip code level if they were reticent to provide customer specific information.
- Development of reporting standards that would solicit a minimum amount of information from distributors while providing some customer service information to support manufacturers.
- A reporting format to bring consistency to reporting with columns in a specific order in the most common format – Excel – while also encouraging the usage of EDI (i.e. no more .pdfs, .txt files or green bar paper!)
A standards report was written along with recommendations for POS / POT (point of transfer) reporting.
The first phase involved soliciting manufacturer, distributor and third party endorsements of the minimum standards. To date, 48 manufacturers, 16 distributors, IMARK and NAED have endorsed the standards. Endorsees and the standards can be downloaded from the NEMRA website.
There is no cost to a manufacturer or distributor to endorse and adopt the standards. To learn more, contact myself as Channel Marketing Group facilitates this initiative for NEMRA.
Getting Paid for Efforts
In talking to manufacturers and distributors who have endorsed the standards, all feel that sharing the minimum amount to information to compensate manufacturer representatives for their efforts on behalf of the manufacturer and in support of the benefiting distributor is “the right thing to do” and is “ethically correct.” While some manufacturers desire customer level information, the standards left that to a commercial decision between the distributor and the manufacturer.
To give a sense of the financial impact, and why representatives consider whom to support, consider the scenario where a rep sells $3,000,000 of material to two distributors, both of whom have RDCs / CDCs. If 75% of sales are billed direct to branches (perhaps drop ship orders or stock material) with the other 25% going to the RDC / CDC, the rep “deserves” to be compensated based upon this POS. If one distributor reports for all manufacturer, and they pay, assuming a 5% average commission, the rep earns the full 5%. If the other distributor doesn’t report for 10% of the RDC / CDC sales, or a manufacturer doesn’t pay, the rep’s average commission declines to 4.5%. (see below)
In the world of COVID, if sales decrease 25% and then to not get paid for 10% of the sales through a RDC / CDC … If you were the rep, which distributor would you support?
Gaining awareness and having standards was Phase 1. Phase 2, POSConnection, just went live and has some pilot manufacturers as well as 60 distributors sharing information.
POSConnection is a secure data highway hub that aggregates a manufacturer’s POS information, has the information “normalized” against their product files and then delivered in one format for easy integration into their system.
Distributors benefit by managing one data format and being able to send all of their POS information through the hub (or to a select group of suppliers and the hub).
Reps benefit through faster report processing and access to a portal that details transactions at the zip code level for their distributor / manufacturers so that they can have more accurate commission and sales reporting.
POSConnection is powered by SPARXiQ, a trusted supplier to many distributors in the electrical industry. Further, detailed agreements are signed to ensure distributors retain ownership of their data (until it is shared with the supplier), data security and that information is not aggregated except for the intended supplier.
Attend this Week\’s Webinars to Learn More
To learn more about the POS initiative and POSConnection, NEMRA and SPARXiQ are holding three webinars on Thursday, July 23rd to share more details and answer questions:
POSConnection helps manufacturers access distributor point of sales data quickly, accurately, and securely, ensuring independent sales representatives can be correctly compensated, while also providing them the opportunity to directly access POS data at the transaction level to enhance commission reporting.
With POSConnection, you learn what, where, and when it was sold, at the zip code level.
Attend this webinar to understand how you benefit from this NEMRA-endorsed initiative and, more importantly, how you can play a role in encouraging the adoption of the process.
POSConnection is proud to partner with NEMRA to bring a powerful point-of-sale data hub to the electrical industry.
As part of a tailored solution for the electrical industry, POSConnection is designed to:
- Address industry reporting issues and align with manufacturer-endorsed NEMRA standards for POS data at the customer zip code level
- Ensure data is provided to manufacturers with necessary information.
- Enable distributor data uploads are cleansed and validated against product information from IDEA and manufacturer submitted product information.
Providing the right data to each of your vendors can be frustrating and time consuming. Aside from the varying templates, requirements, and preferences, transferring transaction data separately to each manufacturer partner takes time and can pose security risks when processes are not organized and executed properly.
Research also shows that reps support distributors whom they know they are being compensated for supporting. Manufacturers need the information, at the zip code level, to appropriately compensate their reps.
Endorsed by NEMRA and NAED, POSConnection provides a simple, secure approach for you to transfer point-of-sale data to your vendors.
Attend this webinar to learn how using POSConnection will support your rep partners and ensure they receive accurate compensation while helping you streamline your POS submittal process.
If you’re looking to streamline processes, ensure data accuracy and support manufacturer representatives in their effort to be appropriately compensated for their efforts be sure to have someone from your company attend one of these sessions.
Thursday, July 23rd. Reserve your seat for one of these 45 minute sessions.