OPI: What do you believe is the overall value of a manufacturer rep group in today’s business products industry?
Kevin Schoen: Manufacturer rep groups have many services that they offer, but it’s important to realise that each manufacturer has different needs depending on their size, where they fit in the industry, their amount of distribution, etc. The one common denominator is that every manufacturer I talk to needs help launching products or getting more share on existing ones.
Some of the core values of a rep group include multiple line selling, feet on the street and flexibility.
OPI: Your group has been around for 60 years. What was your focus back then and what’s your core USP now – has it changed much?
KS: Schoen & Associates was started 60 years ago by my father Fred Schoen who was employed by Sanford Ink as a New York City sales rep. He put together a few lines and moved back to Chicago to represent these in 13 states.
Today, we cover 17 states in the Midwest, with nine field sales people and one office staff, representing 15 manufacturers. We have made five acquisitions of other rep groups which have given us relationships in the jan/san, tech and contract furniture channels. Our current focus is in furniture where we can provide the most value.
But to properly answer your question, our core USP now and 60 years ago rests with our relationships in and knowledge of the marketplace. Information is everything in this business – without it you are a rudderless ship.
What is different today is that the information changes daily if not hourly. The industry, back when we started in 1956, was almost all privately-held small to medium-sized manufacturers. They operated in an abundant range of products that were demanded by consumers. Generally, suppliers manufactured these products in the US, with a lot of custom-manufacturing taking place as well.
Today, because of smart devices and technology, companies need far fewer products. This shrinking range has put more margin pressure on the remaining items. Also, a good percentage of products are not produced in the US anymore, so manufacturers provide less value when they import the products just like their competitors do. In fact, in many cases large distributors are able to have their private label products produced by the same import manufacturers. Consequently, the value of the manufacturer lies with logistics and new product development.
OPI: What’s the biggest challenge you have?
KS: A rep group is usually organised around just a few manufacturers. This leaves us very vulnerable to being reduced in a short time. We have endured several of these situations where we lost our key line and had to find another to continue.
In terms of the bigger picture, we are constantly looking for ways to add value to our manufacturer’s selling proposition and for the customer we call on. Some would suggest we are adding cost but that’s not true. In the words of United Stationers [now Essendant] founder Howard Wolf: “You can replace the wholesaler but you cannot replace the function.” It’s the same for us – you can delete the manufacturer’s representative but you cannot delete the function.
Someone, somewhere has to do the work and bear the expense. My view is that rep groups provide a lower cost of sales because of their shared resource environment. There is no other, more efficient way.
OPI: What do you think is the value of a regional versus a national group?
KS: I believe it’s in the best interest of a manufacturer to have 4-8 independent rep groups to cover the US and manage them with one employee of the company. Too many times I have seen a national rep group take on a manufacturer and neglect certain areas. When the manufacturer wants to leave it’s a huge problem. We will provide the service of putting national coverage together and providing oversight, but in my opinion the manufacturer needs to have an individual responsible for results.
