By Bridget McCrea
A three-part series that examines the key stages of the distributor-supplier relationship and how to create alliances that endure the test of time.
Read Part I of this series, "The Courtship," HERE.
Read Part III of this series, "The Divorce," HERE.
So, the honeymoon is over and now it's time to get down to business and focus on why you came together in the first place-to make some money in the business partnership, explore new markets, tap into new customer bases, and ultimately create a long-term, win-win relationship for both parties. Unfortunately, these things don't always come easily once the initial planning and brainstorming is over and everyone has returned to their daily "fires." But much like a personal relationship, the distributor-supplier partnership requires attention, nurturing, and the occasional troubleshooting.
In other words, it can't just run on autopilot, especially not if you want it to thrive and produce the intended results (You know the ones that you sat down and brainstormed over back during the "courtship" period?). That's right folks, maintaining those alliances for the long term takes care, feeding, and good communication to make sure everyone is on the same page.
Put simply, enduring business relationships just don't happen and develop without both parties putting in consistent, dedicated work. "Studies have shown that more than competitive prices, strong relationships with suppliers, distributors, and other servicers leads to continued business success," writes Maria Martyak in "Partnerships Improve the B2B Supply Chain." "Businesses that view their suppliers and distributors as partners rather than customers go farthest toward optimizing their B2B supply chain networks and maintaining long-term, financially beneficial relationships."
To maintain a true partnership, suppliers and distributors need to share information and agree upon marketing, sales, and growth goals. And despite the obvious benefits of doing this, many businesses are still hesitant to do so as they fear that the potential partner will attempt to take customers from them. "Rather, this relationship-style view could enhance their business and drive customer loyalty," Martyak adds. "Businesses that understand their partners well are better equipped to collaborate with them, help them thrive, and engage in a mutually satisfying partnership."
Developing Partnerships that Work
Lately, it seems like getting to that "mutually satisfying partnership" nirvana is getting more and more difficult for electrical distributors and their suppliers. According to the recent Reimagining Distributor and Manufacturer Relationships survey of 246 NAED companies (102 distributors and 144 manufacturers), 91 percent of participants believe there is a need for manufacturers and distributors to reimagine how they can better work together and more collaboratively.
In tED's "How the Electrical Industry Stacks Up on the Partnering Front," we noted that the survey also found that a higher percentage of distributors believe manufacturers are not prepared (i.e. mindset, culture, strategies) to partner, and that the opposite is also true in that more manufacturers than distributors believe distributors are not prepared to partner.
"There isn't an underlying culture of mutual partnership," one manufacturer wrote in its survey response. "Distribution continues to battle manufacturers to gain increasing shares of the manufacturer's margin while offering little in increased benefits. Distribution seems to want the same margin percentages as manufacturers without all the risk such as property, plant, equipment, and so forth."
Steps to Success
To distributors that are in the "maintenance" stage of their supplier relationships and looking for ways to enhance the alliances and make them even more beneficial for both parties, Dirk Beveridge says the key is to ensure that the alliance moves "beyond traditional, personality-based partnering and into what we call, 'organizational-based' partnering."
"We've all heard the stories about executives who can get in a room, develop a course of action, be excited about it, and get committed to it," says Beveridge, founder of Chicago-based UnleashWD and author of INNOVATE! How Successful Distributors Lead Change in Disruptive Times, "but as soon as that plan hits the field, life happens and guess what? The market, the completion, and other supplier-distributor partnerships have the final say."
Digging down an extra layer, even the other distributors that the specific manufacturer is working with have a say in whether the newly-formed alliance will work (or not). "That's where the complexity comes in," says Beveridge, who encourages distributors to think deeper and harder about the organizational commitment to the partnership, that the two entities are getting involved with (versus individual commitment).
In many cases, this means taking a step back and determining whether the corporate cultures of the two organizations are truly aligned (or not). Whenever possible, this should be done early in the partnering process and then respected and upheld throughout the life of the partnership. A supplier that truly believes in the value of partnering with outside companies, for instance, and a distributor that doesn't feel the same way will probably not be a good, long-term fit.
Champions and Communication
If there's one thing that can keep even the most uncertain business alliance going, it's good communication. "Both sides need to come in and really have the freedom to talk honestly and openly about the business environment. You have to be prepared to expose yourself, and to listen to critical opinions, thinking, and positions," LEDVANCE's Matt McCarron told tED in "Shoring up the Distributor-Supplier Relationship One Building Block at a Time."
"Just ask and listen," McCarron advised. "One of the great things about this industry is that we are all passionate about our businesses. People are invested in their companies—dedicating decades of their lives to their success—and supplier/distributor relationships go beyond the professional four walls."
And finally, McCarron offered this piece of sage advice to both parties: "Ask your supplier or distributor what can be improved so you both win, and honestly listen, even if you don't like what's being said. It may sound simple, but if you don't start with those two things, the relationship can't grow."
Beveridge concurs, and says that one of the best steps a distributor can take is to assign a "champion" for the partnership. In other words, make at least one person responsible for regularly reviewing the relationship's wins and losses, corresponding with the supplier, troubleshooting problems, and exploring new opportunities.
"This champion should serve as the 'voice of the partner' within his or her own organization, and should be charged with helping to keep that alliance healthy and on the right track," says Beveridge. "That way, when issues arise, someone within the distributorship can actually come to the table and advocate on behalf of the partner and the relationship as a whole. That's a pretty important step that some companies tend to overlook in their rush to get the deals done and the partnership up and running."
McCrea is a Florida-based writer who covers business, industrial, and educational topics for a variety of magazines and journals. You can reach her at email@example.com or visit her website at www.expertghostwriter.net.