Who Should Be Carrying Product ... Reps or Distributors?

Over the past few months we've been talking with a number of reps throughout the country as we work with an electrical manufacturer to review their reps and, in some instances, recruit new reps.  Because of their product type we've inquired about their warehousing capabilities, solely because their competition has a number of reps with warehouses.

In many instances we've had reps tell us that the had had a warehouse but closed it a number of years ago, frequently to positive reaction from medium to large size electrical distributors... and have seen their business grow.

Which then led to a thought, and some conversation about reps as an inhibitor (today) and possibly a contributor (tomorrow), especially for larger markets, of distribution consolidation.

Now you may ask why but consider, whom does a rep warehouse benefit?  In reality it benefits those who don't want to carry inventory ... either due to logistical reason or financial reasons.  Typically this is a small distributor or a small branch.  What would be the impact on small distributors, or small branches, if they couldn't send a truck to a rep warehouse, sometimes multiple times a day, to pick up material?

And couple this with manufacturers increasing pre-pay shipments to cover increased freight fees?

A major role of a distributor is to carry inventory to support their customers' needs.  This can be at a location or through a distributor-owned redistribution system.  Well run medium to large distributors can invest in systems and inventory to bring value to manufacturers and their customers.  The smaller companies frequently don't want to carry the inventory (they can't afford carrying the inventory).

So, could reps be helping small distributors stay in business (and are they getting a premium for it)?  Should reps have warehouses or should product go directly from the manufacturer to the distributor (or customer if it is a drop shipment)?

Would you prefer to work with a rep that has a warehouse and enables your competition (and puts them on a level playing field with a distributor that carries stock) or with one that supports distribution / end-users and you are responsible for your inventory management?

It also makes one wonder if NEMRA has done a study to identify which model is more profitable for a manufacturer and for a rep?

Thoughts?