other’s business? Six characteristics are found in the most successful strategic vendor partnerships:

 

1. An all-inclusive view of the trading relationship. Each trading partner should start by looking at partners holistically, and then begin to treat them differently, based on characteristics that they define. Chart 4, “A Holistic Look at All Elements of the Trading Partner Relationship,” provides an overview of opportunity areas.

 

2. Clear, documented trading expectations. Documenting policies in regard to your trading partners is not being adversarial or overly rules-bound. Rather, taking the time to think through and develop a framework for working together clarifies expectations on both sides. It enables you to decide whether you really want to work together, and sets the stage for win/win. Measurement is key, making scorecards an integral part of the documentation process.

 

3. A direct link between scorecard placement and the status of the trading relationship. If trading partners do things well together, they have a good relationship –– and a good relationship leads to doing bigger things together and an even better relationship. If they don’t, they don’t do as much business together.

 

In the latter case, the message –– spoken or implied –– is very much what the CPG company with which I worked

was saying to the regional retailer when it replaced a vice president with a junior salesperson on the account: “We’re just not working well together.”

 

4. Mutual understanding that all relationships are not equal. Strategic trading partners strive to find the unique potential in each other, and decide together how best to maximize it.

 

Working with a strategic partner should be very different from the traditional supplier/retailer relationship. Typically, a buyer says to a supplier: “What’s your deal? What are your trade promotion dollars? What’s your gross margin? What ad do you want to buy?” Strategic relationships look beyond this typical exchange. Like Sainsbury and Starbucks, the partners think big and out of the box.

 

5. Appropriate organizational structure, cross-functional alignment and rewards that encourage the desired behavior. Today, a typical retail procurement or merchandising director is measured on his or her net margin contribution. And if you’re a supplier, you have probably had the unsettling experience of being on the receiving end of a large undocumented invoice deduction –– with no idea what it was for. Sometimes, you discover there was no reason –– except that the retailer didn’t make its quarterly profit number. So they have deducted to make the number, and will now try to figure out how to pay you back in the coming quarter.

 

6. Open communication and a win/win orientation. Both of these are easier to achieve when you begin to align more closely with partners who bring something to the table beyond merely product or a low price on it.

 

Imagine the opportunity if a retailer came to you and said, “I’m trying to target aging consumers. Here are the demographics