Distributors and suppliers are both working towards the same goal, so what’s stopping them from working together?
At a basic level, all trading agreements involve two (or more) parties, looking for mutual growth.
Suppliers want to grow by increasing loyalty and incentivising purchases. Distributors and buying groups want to grow by reducing their costs. And, by working together, both can achieve their goal.
Most companies keenly understand this symbiotic relationship. According to a survey by Tradeshift, approximately 85% of distributors say their business’ success is tied to that of their suppliers.
But too often, the companies involved still work in relative isolation. Distributors and suppliers record trading agreements in different systems, and track progress independently. Discrepancies creep in and disputes arise. And instead of mutual benefits, trading agreements deliver mutual headaches.
In this post I’ll explore why greater collaboration has to be the future for suppliers and distributors alike—and the part technology can play in bringing trading partners together.
The pitfalls of isolated deal management
When suppliers and distributors don’t work together, they can find themselves falling into three major pitfalls and, far from driving mutual growth, actually putting their trading relationships at risk.
- A lack of clarity across rebate deals
Working with fragmented information spread across multiple systems, and different ways of recording agreements, suppliers and distributors can end up losing clarity of the details in their trading agreements. Whether it’s an opposing view of how close the distributor is to a rebate threshold, or what products are included as part of the deal, this lack of clarity can lead to unnecessary disputes, and even money left on the table by distributors.
- Complicated admin challenges
Without a unified way of handling rebate deals, suppliers and distributors are forced to fall back on their own admin practices. These can range from using spreadsheets to manage rebate data to using inadequate ERP systems to calculate rebates—but they rarely match the method used by their trading partner. It can lead to a large amount of manual effort, and wastes rebate manager time that could be spent on developing relationships and seeking new opportunities.
- Disorganised deal information
Often, proposed deals are negotiated by email, with details being sent back and forth between the parties. This isn’t only an inefficient way of arranging deals, it also leads to huge inefficiencies later on, as companies have to trawl through email chains to find a particular agreement, and check the terms and conditions.
For all these reasons and more, the future of trading agreements has to be one of greater transparency, visibility and, above all, collaboration.
It’s time to collaborate
When suppliers and distributors collaborate on trading agreements, they both have the same understanding of the deal, they reduce the risk of disputes, and they’re more likely to maintain a strong relationship.
But for most companies, becoming more collaborative will mean developing a number of new systems and practices in their trading deal management, including:
- Record agreements in a standardised way—in one centralised location, to ensure everyone can access up-to-date, accurate information
- Common processes—to ensure rebate calculations match up and reduce the risk of errors
- Shared sales data—so both parties have a clear idea on progress towards rebate thresholds
- Share business activity forecasts—to closer align supplier and distributor goals, and ensure mutual success
- Simplify rebate sign off—with an easy-to-access place to review and accept agreements
Many distributors are adopting platforms like our own DealTrack to transform their management of trade agreements and ensure mutually profitable growth.
And with the introduction of Collaborator, DealTrack’s new multi-trading partner functionality, distributors can share schemes, deals and granular data with their suppliers to boost collaboration in their trading relationship.
Distributors and suppliers must come together
The benefits of distributor-supplier collaboration are clear—each party has greater visibility, more clarity, and more control over their trade agreements.
And as we see more companies adopting new collaborative practices, such as standardised ways of recording agreements and greater sharing of data, we’ll start to see stronger relationships that lead to mutual growth.