It has been interesting to read the national and business press articles over the last 9 months or so regarding the changes in stated relationships between the national retailers and their supply “partners”.
Of special interest to me has been the obvious differences between the stated aims of building improved supplier partnerships whilst a very different strategy appears to be in operation.
We all want to improve our results in business, and look for the ways in which we can make those improvements easily, effectively and where they will be sustainable.
I agree with the retailer CEOs – ‘one of the most-fruitful areas for improvement is to work on building a better relationship between the supplier and retailer/wholesaler’.
This is the question on which I used to ponder when I was active as a buyer, and some of the answers felt that they would cut across that traditional buyer:supplier interaction – would I be giving away some of my “power” by making the changes?
The answer is a resounding “No”, and this is why….
There are 5 key areas that will help to deliver an excellent relationship:
1. Set clear and achievable goals
Suppliers really do want to sell more to you, and are prepared to invest at the right levels to gain additional turnover – setting out in advance ambitious but realistic goals (the “A” and “R” in SMART) will help the account manager sell in the reasons why your account should be the one that gains the additional funding.
It is all too common as a NAM to receive a request for additional funding that is so in excess of reasonable that it makes it impossible for the NAM to “sell” your requests back to their Head Office. You should always be ambitious, but good preparation will enable you to set out your requests at the right level, and also the reasons why this can be achieved by your supplier.
2. Build relationships with the suppliers most likely to help deliver your (and your corporate) objectives.
Map out your suppliers into the “cans”, the “can’ts”, and the “won’ts”. There are a number of suppliers who would love to support you more, but are just unable to. Equally, there are some suppliers who won’t support – due to their funding requirements and other customer commitments. Thirdly, those with the desire and the ability to support your goals.
There will be more than you may originally have thought. These are the suppliers with whom you should be investing your time and efforts. This is where the rewards in terms of improvements in range, support and turnover will be affected.
3. Be aware that wholesalers have other suppliers, and suppliers have other customers.
We are not working in a vacuum of competition – your NAMs and NACs will be competing against their peers internally to provide the opportunities which deliver maximum return – and this is more front of mind now post-Tesco 2014 communications than ever before.
If we are setting out clear goals, a roadmap for achievement and are able to deliver to these commitments, then suppliers will fight harder to find the revenue that supports this growth. But all proposals have to be conditional – failures to deliver make the task of gaining additional investment all the harder the next time around.
4. Educate suppliers to know what you need to make the business processes run smoothly.
One of the major issues I faced both as a buyer and in sales was non-quality costs. Those additional costs to the business caused by incorrect administration – whether it was a supplier putting forward price changes with too short notice, or changes to products without informing the masterfile causing delays and rejections at point-of-delivery – all caused unnecessary work, issues and distractions away from the objectives of growing the business.
Which of us spends the time to ensure that new account managers can work to our timescales/requirements, and which of us just expects that the previous NAM will have handed over correctly and be surprised when mistakes occur?
5. Deliver on time, pay on time!
When working in wholesale, payment terms were a key profit area, especially as net margins are generally low. However, the supplier commitment to delivery of the right goods, to the correct location on-time is a fundamental supplier requirement. Payment on time is a fundamental for wholesalers.
Does delivery against the five areas above reduce the power of the buyer? In my opinion, and my experience, if a buyer can work closer with key suppliers (and this is not necessarily the same as the biggest supplier in a category) then the power of buyer is increased significantly. Clear definition of the goals, building better trading relationships with those suppliers whose goals and objectives can most closely align and delivery against commitments has absolutely resulted in the best trading improvements.
Building better relationships isn’t everything. But it is most definitely the best starting point to help achieve our objectives – which is to ensure that our customers (and their customers too) get the right products at the right prices all of the time.