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What Makes the Cut: How Distributors Decide What to Stock

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A customer walks up to the counter and asks for a specific brand.

Another wants the lowest price.

A third just needs it now.

Those demands, all of which must be met, are carefully considered by distributors. What winds up on the shelf is the result of constant evaluation, competing priorities and calculated decisions.

As Mike Mohler, executive vice president and chief purchasing officer for the

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, puts it, “It’s (something) we grapple with on a daily basis.”

The Four Pillars Behind Every Decision

At the distributor level, brand selection starts with what Mohler calls “the four pillars.”

First comes cost. “I need to have a competitive acquisition cost… but I need to think about total cost.” That includes everything from freight to handling to overall profitability.

Next is logistics. A supplier has to deliver product in a way that fits the distributor’s operation, not just offer a good price.

Then comes category management. The goal is simple in theory and difficult in practice. Stock the right part, in the right place, at the right time, in the “right brand.”

Finally, there is data. Clean cataloging, strong product information and insight into how parts move all factor into the decision.

If a brand cannot support all four areas, Mohler says it is unlikely to make the cut.

The Customer Is Driving More Than Ever

But even if all those pillars are met, the real test is the customer. Today’s shops have numerous suppliers at their disposal; ready and waiting for a chance to deliver the required products via the desired brands.

“If they want an oxygen sensor from Bosch, we’ve got to be the guy to get them that. If they want an air fuel ratio sensor from Denso, we’ve got to be the guy to get them that,” said Mohler. “We’re carrying SKUs in multiple brands because our customer demands it.”

Distributors also have to account for a wide range of customers.

“We’ve got people that want to pay for a $500 brake job. We’ve got people that can’t afford a $500 brake job, and that’s fine.”

That drives a tiered strategy. Premium brands, mid-tier lines and opening price point options all have a role.

As Mohler points out, “that lower price point necessarily means we have to sell much more to be able to make the same dollars.”

Data Is Replacing Guesswork

All of these decisions continue to evolve as distributors respond to changing demand, new technologies and ongoing market pressure.

“We have a more eclectic and more demanding customer base than we’ve ever had,” explained Mohler. “They now can pick and choose what branding they want. We have to become experts in reading minds, and we use data and all the best thinking to try to figure that out.”

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