Often, companies who do not work effectively with trading

partners don’t know it, or don’t know they’re missing out.

Sometimes they do –- but they don’t know why.

 

T
oday, you MUST differentiate. Somehow, you must set
yourself apart in the marketplace. You know it, and your
retail customer knows it.

 

As the vice chairman of one leading mass merchandiser said recently, quoted in Supermarket News, “…For us to compete in the future, we cannot be all things to all people … we must work together with our vendor partners to provide unique value to our customers…”

 

But while most CPG manufacturers and retailers know they need to differentiate their products and stores, too many are still approaching trading relationships if they were largely equivalent.

 

They’re not. And today, you can’t afford to act as if they were. If you do, not only will you fail to get the ROI you need, but you will miss out on huge opportunity –– the opportunity to gain market advantage by working strategically with the right trading partners up and down the value chain.

Factors Converge, Driving Partnership Importance

Indeed, at present a number of factors –– our precarious economy, consumer consumption trends, retailer consolidation, and the differentiation imperative –– are coming together. The impact is such that the only conclusion one can reach is that gone are the days when trading partners could afford to work at cross purposes, creating lose/lose situations, or unilaterally, failing to take advantage of what a partner can bring to the table.

 

Often, companies who do not work effectively with trading partners don’t know it, or don’t know they’re missing out. Sometimes they do –- but they don’t know why. For example, several years ago I was working with a major CPG company to help analyze its customer base, and understand with which retail organizations it was making money, and which it was not. This supplier’s goal was to begin putting its major resources where the biggest profit returns would be.

I was also working with a major regional retailer; this company was trying to learn how it could better partner. One afternoon, the vice president-merchandising called me, and said, “Peter, I know you’re working with (major CPG company). Why aren’t we getting more trade dollars from them? We notice that, over the last two years, the trade dollars and the number of promotions they’re running with us have declined significantly.

 

“We also notice that a vice president used to call on us. Now it’s a just junior salesperson.”

 

The vice president-merchandising knew something was awry, but he didn’t know what. He had also observed what is happening more and more: At more and more companies today, resources include human capital and talent: “We are going to put my best people, as well as my money, against our best customers.”

 

“What’s going on?” the retailer wanted to know.

 

Because my work with the CPG company was confidential, I couldn’t answer directly. But I did reply that this company was involved in a process of evaluating how to decide where to put its resources. I pointed out that in today’s economy, no supplier can afford to invest resources where there is no return.

 

I then facilitated an introduction — the vice president of merchandising and his counterpart at the CPG company –- so that the problems could be surfaced and addressed.

 

Other leading companies have long since acted on this realization. Consider Procter & Gamble’s “Connect & Develop” program, implemented in 2003. P&G saw that to be successful in the future, it would have to look beyond its own walls for innovation, partnering with its customers and others along the value chain.

 

Accordingly, today P&G partners with its suppliers and its customers –– and also beyond traditional trading relationships - with entrepreneurs, universities, even competitors.