Handling Disputes Between Manufacturers’ Representatives and Manufacturers

by Jerry Leth, Vice-President and General Manager, MANA

Most of the time, manufacturers’ representatives and manufacturers get along fine. Sure, there are minor issues, but the two resolve those quickly and life moves on. Sometimes disputes become major and disruptive, to the point where business activity significantly reduces while the two parties battle with each other — definitely not a desirable situation.

What approach works to settle the differences? That depends. Do both parties want to resolve the problem and move on? If, so can they discuss the issue unemotionally and look for an alternative to either side’s stand that meets the goals? Sometimes you need to be creative and look for different ways to do things, ways you had not thought of before. Who knows? Perhaps the new way improves the values and benefits provided by the previous methods. For example, when Fred Sturdevant,* the new sales manager at a principal, asked manufacturers’ representatives for call reports, they vehemently refused. With the previous sales manager, they periodically and on a hit-and-miss basis called to provide updates while driving between sales calls. Sometimes they spoke, sometimes they left messages, but never call reports. For a while, neither side budged and the situation became tense.

Fred was fairly new to working with manufacturers’ representatives, so he went to the member area of the MANA website and found “Drawing the Line between Communication and Call Reports,” an Agency Sales article. That article taught Fred a lot about communication with the manufacturers’ representative sales force. He went back to them and apologized for his rookie mistake. He then suggested they set up a conference call to discuss communication.

Fred started the call by asking if everyone was in agreement that they need to communicate with each other. He explained that when the manufacturers’ representatives openly communicate relevant information with him, his team more effectively supports their selling efforts. In turn, when order issues crop up, Fred promised to notify the manufacturers’ representatives immediately, so they can work with customers. At the end of the call, all agreed the new approach made sense and provides value to both sides. Fred then worked with each individually and worked out a system the manufacturers’ representative liked that delivers relevant and useful information. All in all, a definite improvement.

When both parties share a common goal, the third alternative provides a superior dispute solution. Read the book The 3rd Alternative, by Dr. Stephen R. Covey, to learn more on how to implement this process.

If time passes and it becomes obvious one or the other party wants no resolution, that’s a different story. While the manufacturers’ representative or manufacturer may have been a great partner in the past, when personnel change, so does the organization. Forget how things were; they won’t be the same, so it’s time to pull the plug and terminate the agreement. If commissions are due, retain an attorney and hope the attorneys work out a resolution that both sides accept. When that fails, the attorneys may recommend mediation and hopefully that provides a resolution.

The last thing anyone wants is to end up in litigation. Litigation fails as an effective method for resolving disputes. It takes up a huge amount of time and money and emotionally drains participants.

* Our newsletters sometimes combine the experiences of two or more MANA members and we change their names to protect their privacy.

Jerry Leth, MANA’s vice-president and general manager, started as membership manager in August 2000. Previously, Jerry owned and operated Letco Tech Sales, Inc., a MANA member, multi-line professional outsourced sales agency he founded in 1989. Before starting his own agency, he managed a network of manufacturers’ reps as vice-president of sales and marketing for torque and tension equipment. Jerry graduated from Stanford with a mechanical engineering degree. He started his career at Hills Brothers Coffee in San Francisco in engineering and production before embarking on a sales career.