Best Practices for Supplier and Distributor Collaboration

Introduction:

For development and success in supply chain management, suppliers and distributors must work together. Both sides want to increase sales and save costs, but they typically operate separately, causing inefficiencies and tensions. Collaboration helps close these gaps, improving operations and business results. This article discusses supplier-distributor collaboration and how rebate management software might improve it.

How do suppliers and distributors differ?

First, supplier vs. distributor discrepancies are important in the supply chain. As the name implies, distributors distribute and work directly with manufacturers. Distributors are the manufacturer’s direct contact with product customers. They buy from the supplier and sell to wholesalers or retailers. Wholesalers occasionally pay rebates for buying big quantities of one product. Suppliers deliver goods and services to consumers through distributors linked to the manufacturer. Suppliers may only make or buy products, not progress them. Distributors may provide items directly to consumers due to their resources and expertise. Supply and distribution cannot thrive without each other, regardless of their disparities. Suppliers and distributors must collaborate to satisfy product demand and reach customers. They desire a smooth supply chain without product shortages.

Suppliers vs. distributors’ separate deal management risks

When suppliers and distributors don’t collaborate, they might fall into three big mistakes that put their business relationships at danger rather than growing together.

Rebate deals are unclear.

Fragmented information across many platforms and different agreement recording techniques may cloud commercial agreements for suppliers and distributors. Suppliers and distributors may argue over how close the distributor is to a rebate threshold or what items are covered, wasting time and costing distributors money.

Complex administrative issues

Without a single rebate deal process, suppliers and distributors use their own admin. These can include spreadsheets to store rebate data and insufficient ERP systems to calculate rebates, but they seldom match their trade partner’s strategy. It requires manual labour and consumes rebate manager time that should be spent building connections and finding new possibilities.

Disorganised deal data

Parties often negotiate transactions over email, exchanging details. This inefficient method of establishing transactions also causes tremendous inefficiencies later on, as corporations must search email chains for an agreement and review its terms and conditions. Trading agreements must be more transparent, visible, and collaborative for suppliers and distributors for these reasons and more.

Suppliers and distributors must cooperate.

Suppliers and distributors are more likely to stay together, decrease disagreements, and comprehend the contract when they work together on trading agreements. Most organisations will need to implement new trading transaction management systems and procedures to become more collaborative:

• Standardising agreement recording in one place ensures everyone has up-to-date, correct information.
• Common processes—to verify rebate computations and eliminate inaccuracies
• Sales data shared so both parties know rebate threshold progress.
• Share business activity projections to match supplier and distributor goals and assure success.
• A simple spot to evaluate and approve rebate agreements simplifies rebate sign-off.

Distributors are using rebate management software like ours to improve trade agreement administration and grow profitably. With Collaborator, our new multi-trading partner capability, distributors can exchange schemes, deals, and detailed data with suppliers to improve trade coordination.

Suppliers and distributors must cooperate

Suppliers and distributors gain from collaboration by having better visibility, transparency, and control over their trade agreements. As more organisations implement new collaborative practices like standardised agreement recording and data sharing, supplier-distributor partnerships will strengthen and flourish.

Conclusion:

Collaboration between suppliers and distributors is useful and necessary for contemporary supply chains. Sharing sales data, standardising agreement documentation, and using effective rebate management tools may promote transparency, conflict resolution, and profitability for both parties. Collaborative techniques and technology will strengthen and improve partnerships, boosting success and growth in the competitive market.