Cost Increases & Customer Contracts = Distributor Margin Squeeze

By John Gunderson – epaCUBE

The B2B distribution business is experiencing one of the heaviest cost increase periods in years. The cost of steel, copper, wood, and much more is climbing fast and when you couple that with supply chain issues it has created a perfect storm of cost increases from your suppliers.

This inflationary effect of your suppliers cost increases can be very difficult to manage with your customers who are on a contract or negotiated customer specific pricing.

Distributors often get caught in the middle

During my distribution days when you got that 4% price increase notification we found it difficult to communicate, manage, and adjust to the increase with our largest customers. The risk of passing on the full price increase to top customers with contract and customer specific prices is high as you have significant business with these large customers.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>