Standards for trading partner performance

help delineate and clarify who your

high-performance trading partners are.

 

Finally, a transactional partner may be a company whose products are staples –– the retailer simply must have them in the store.

 

Once its potential partners are segmented, a company –– whether supplier or retailer –– needs to decide how to act toward those segments. Sample tiered approaches are depicted in Chart 6, “Sample Trading Partner Resource Allocation Based on Relationship Status.”

 

With top-tier strategic partners, the company may decide, for example, to hold quarterly top-to-top planning meetings featuring full disclosure.

 

With bottom-tier companies, by contrast, trading partners may simply negotiate hard on price.

 

Standards for trading partner performance help delineate and clarify who your high-performance trading partners are. To develop these standards, decide what has an impact on your bottom and line, and set standards around these activities and functions. Some sample supplier standards are suggested in Chart 7, “Strategic Vendor Partnership Architecture / Sample Vendor Performance Standards.”

 

Some trading partners will be able to meet these standards; many will not. For companies willing to stretch to meet them, give credit where credit is due, and move them onto the scale where they have a chance to prove themselves as, say, an innovative partner. Do a pilot or two. See if they are willing to adjust and improve.

 

One retailer with whom we worked had a policy objective for each element of operations –– on new item introductions, for example, it was to improve speed and accuracy of new item setup. In conjunction with this policy, the retailer had defined as a minimum standard for each of supplier: “to provide error-free item information in the documents they send us.” And to be considered “Best in Class,” the supplier’s item information needed not only to be accurate, but to be transmitted electronically, in a specified format.

Acting on Trading Partner Segmentation

For companies seeking to improve the partnership management process, if you have done the appropriate segmentation, you must now decide how you will behave differently.

 

With strategic partners, you might undertake leading-edge development or investment-grade new-product pilots, or advanced forecasting and long-term business planning.

 

Because such opportunities are directed only to strategic partners, this work has an advantage besides the business improvement generated with strategic partners: It can create, in “tactical” partners, the desire to be strategic, elevating their performance and creating additional opportunity –– and so it grows.

 

Innovative partners might be invited to create or test new concepts, invest jointly in new programs, or develop best practices.

 

Tactical partners might focus their work together on improving efficiency.