Partner Selling: 8 Steps to Serve Your Customers & Be Rewarded (1363 Words)

Partner selling is a very logical approach to selling in today’s electronically connected world. We all like to do business with people we know and trust. This simply makes a buyer more confident in their purchase. If you sell from the perspective of serving customers as a partner, rather than an opponent, your rewards will certainly follow.

Step 1—Caring

To become a trusted partner with your prospects and customers, first care enough to see their needs through their eyes. Their perception is their reality. Seeing things through their eyes will help you to position yourself as their caring and trusted partner—rather than just another vendor.

Step 2—Knowledge

Product knowledge is table stakes in the game of selling. Without product knowledge, one will be lost in the fine art of translating product features into customer benefit. The other knowledge is that of knowing customer needs, wants, and desires. This comes from direct and meaningful communication with your customers. I’ve found that a basic understanding of Neuro-Linguistic Programming (NLP), the science of how the brain learns will assist any salesperson to become substantially more effective in the sales process.

Step 3—Listening

Listen for NLP indicators. Everybody has a primary basic learning strategy: visual, auditory, or kinesthetic (feeling). People use each of the three strategies in different learning environments. Yet, most people favor one strategy. Determine your customers preferred strategy by listening to the kind of words they use. Talk with them in their NLP favored terms to build rapport more quickly. As an example, the customer who says something like, “I wonder how this will look on me?” is most likely a visual learner. Talk to that person in visual terms. Say something like, “Just picture yourself…” This is called direct or matched communication; you are mirroring your customer. Had you said, “Feel this fabric…” You would have had a communication mismatch. This communication matching is very effective in fast rapport building. The more rapport you have with the prospect/customer, the more they will tell you exactly how to sell to them.

Step 4—Questions

One learns more through asking than does one in answering. Ask and listen, is the formula for selling success. The correct questions, if answered, allow you to hear exactly how to sell to the individual, or organization. Asking about needs, wants, and desires—along with past purchases will help you to know what product features will deliver the benefits desired. In your questioning, be certain to determine preferred learning strategy quickly and use seeing, hearing, or feeling words in your efforts to question prospects and customers.

Step 5—Benefits

To this day, viewing Web Sites, sales and marketing materials, and listening people talk only about features, causes me great pain. People buy based on benefits; meaning how the product or service makes one’s life better. Features are those things built into the product or service that assist in delivering the desired benefit. Your customer is always thinking, “What’s in it for me?” If you act as a partner to your prospect or customer, you will always focus on talking about how the product or service will make their life better.

Step 6—Buying Motives

Be a partner by helping prospects and customers to solve their problems…justify their emotional decision to buy through the logic of fulfilling their buying motive(s). Listed below are the six basic buying motives—they should cover most buying situations. Understand how your products and services solve these buying motives and you can be a successful partner with your customer for life.

Different people, in different situations have one or more of the following buying motives. As an example, people generally buy insurance for fear of loss rather than for profit or gain, but play the stock market for profit or gain. Similarly, they buy aspirin and other pain killers for avoidance of pain rather than for pride and prestige. Yet pride and prestige is why most people buy an expensive luxury automobile. Sell to your prospect or customer’s buying motive and you’ll close the sale much more quickly.

  1. Profit or Gain
  2. Fear of Loss
  3. Comfort and Pleasure
  4. Avoidance of Pain
  5. Loving and Affection
  6. Pride and Prestige

Step 7—Create Urgency

Help people to understand why it is in their best interest to act now. Answer objections simply and quickly, as if your customer is asking a question—because that’s what they really are doing. Say, “That’s a great question, I’m glad you asked.” Then go into overcoming their objection by telling how a particular feature creates a benefit that makes their life better.

My favorite method in answering a prospect’s questions is the feel, felt and found method. Say, “I know how you feel, Mrs. Smith recently felt the same way. (Affirm their feelings.) She wasn’t sure the colorful fabric of a swimsuit would hold up to the chlorine of a community pool. She went ahead and took a chance. We chatted the other day, and she told me that she found the color did hold up, even better than she had expected. She thanked me for helping her to choose such beautiful swimwear.”

To create urgency, talk about the limited availability or seasonal nature of items. The herd effect is sometimes helpful to get people into action. This is when you talk about how many have already been sold today, this week, or month. Ask them, “How many times have you gone back to a store to buy something you wanted but didn’t buy and it was gone?” Don’t let this sort of thing happen to your customers. Be a partner and help them not to be disappointed.

Step 8—Close the Sale

You cannot be a successful selling partner for long, unless you turn your prospects into buying customers. You, and your company, must earn a profit. While I am distressed by the number of my live seminar attendees that have told me they came just to learn closes, I am encouraged by the number that “got” the partner selling basics. While closing is crucially important, there is so mush more to selling than the twisting of arms.

I love soft selling and an excellent soft close is silence. If you have enough confidence to remain quiet, simply review your offer, ask for the sale, and wait until your prospect speaks. For most people, silence is very uncomfortable. This is the only pressure I’d ever suggest you use.

Additional closes that I believe you will find helpful:

  1. The Assumption Close. As their “partner” act as if it was natural for all your customers to buy.
  2. The Act Now Close. If you snooze, you loose! Buy it today before it’s gone. Yes, this creates internal pressure, but you are not arm twisting.
  3. The Little Decision Close. First get prospects to commit to a style or color that they like rather than to making the purchase. Then try one of the other closes.
  4. The Premium Offer Close. Buy now and we’ll include…
  5. The Doorknob Close. As the customer is leaving the store, or as you are walking out of the prospect’s office, say, “Oh, by the way…I’m really interested in knowing what is the real reason you decided not to buy today?” At this point, they feel safe and will answer honestly. Then you ad a good partner can say, “Oh, I’m so sorry I didn’t tell you about…  Let me further explain…” Then go to the feel, felt, found method of overcoming objections and when you are comfortable that you answered all questions, try a different close.
  6. The Ask for It Close: There is nothing wrong with simply asking for your prospect to buy. The three great words that will change your life are: Ask For It.  Be a bold and fearless partner, overcome rejection and doubt. Always, ask your partners for their business.

While the above suggestions are not magic and not guaranteed to work all the time; in my experience the above ideas will help you to build more meaningful relationships with your prospects and customers and to sell more of your products and services more quickly.

How Today’s Distribution Partners Add Value (667 Words)

The supply chain has changed. Early in my sales career I learned the stock joke about sales people; they did the least and got the most. The same joke was told about the middleman wholesale distributor. Through the 1970s distributors were rewarded for whom they knew, for getting placement. This was because distributors could do the job (product placement and fulfillment) better than most manufacturers. Times were good; distributors were getting fat and happy.

During the 1980s the hint of change rustled through the distribution channel. Manufacturers started asking themselves, “Do we really need XYZ Distribution?” Most answered, “Yes.” But, some started making different decisions and went direct. I still remember when B&L went direct on the company for which I was a rep. I hated the >*#@%^*s. Times were changing and our country was becoming more national than regional. As the big box category busters came to life, distribution started to change. Distribution sacred cows went to the slaughterhouses because both manufacturers and users realized they had more choice than ever before.

As competition form offshore sources, global alliances and local partnering became apparent, many distributors were figuratively caught with their pants down. Many “fat and happy” distributors were enjoying the life, but not reinvesting in their business. Manufacturers were looking at world class manufacturing techniques but few distributors were doing the same in their area of the distribution channel. What does my little history lesson have to do with your life? Plenty!

Invest in Your Business

Over the last half decade I’ve researched and delivered alliance seminars to many distribution industry niches. The common thread I have seen is a general reluctance of distributors to invest in their own business. There are several reasons but it really doesn’t matter. In the end, if you can’t do it better than the manufacturer, who needs you? I know, you say, “What about loyalty?” Well, your manufacturers have been saying, “XYZ Distribution is not keeping up, we must not be important to them any more.” I realize I’m over simplifying a complex issue, and It’s not as complex as many want to make it.

Today, we are in the information age. I no longer have to get in my car and drive to the local library to get information.  Now, I simply do a few magic clicks of my computer mouse and more information is available on my computer screen than is in hard copy at my library. I still need information, but I no longer need the library. Users still need what you sell, but do they need you? Think hard before you answer the question. If you are not adding value, they really do not need you.

My primary market as a keynote speaker is trade and professional associations. For associations wishing to survive, I continually tell them that they better deliver value. They must deliver more perceived value to each member than the members are spending on their membership. People have more choices than ever before. People will migrate to where they believe they are getting the best value for their money. As a distributor you must be clear on this idea.

Value in Your Eyes, or Theirs?

What are you doing to deliver value? Really now? Are you sure those services deliver value? How do you know they deliver value? Who have you asked? Have you discussed value with your manufacturers? How about with your customers? In “Developing Strategic Alliances” I included a value update form. If you have not yet had time to read the book, here is the basic idea: Write down on separate sheets of paper the value you are getting from the relationship with each of your manufacturers and then the value you think they are receiving from working with you. Have them do the same thing, then switch. What an eye opener. Use the same idea with each of your customers. Now you will get a glimpse of what your manufacturers and customers consider as valuable. Now you can really do something about adding value to your distribution channel.

eCommerce–Are You Ready? (615 Words)

Procurement through the Internet has many industries running for cover. Companies that seek quicker procurement solutions, especially on basic consumables, are now looking toward the Internet. E-procurement is essentially changing the buying method. E-procurement allows your employees to order and receive supplies and services while never leaving their workstation. E-procurement streamlines the traditional purchasing process through the use of Web-technology. The result both cost savings and improved responsiveness from your strategic partnering alliance suppliers.

An issue of Inter@ctiveWeek reported both Ford Motor and General Motors had moved their $80 billion each purchasing online. Ford is Partnering with Oracle and GM with Commerce One to build their systems. “This is the only way we’re going to do business going forward,” says Harold Kutner, vice president of worldwide purchasing at GM. “It’s not going to be an option [for GM’s suppliers]; it will be a requirement.”

In EC World it was stated that, “Enterprise-wide electronic procure-to-pay solutions truly deliver on the promise of the Internet to provide streamlined solutions for business.” “Early adopters of online ordering primarily opt for employees to shop in virtural megastores such as Office Max or Staples.”

Listed below are five types of suppliers that can effectively participate with you in E-procurement, regardless of their size.

1. Companies currently conducting e-commerce with transactional Web sites.

2. Suppliers with Web sites for marketing purposes but not for taking orders.

3. Suppliers without Web sites who can still support EDI and/or CD-Rom catalogs.

4. Merchants without Web sites.

5. Internal suppliers from within your own company.

ECWorld talked about Los Angeles County taking the plunge into Internet purchasing. Chrys Varnes, director of electrical commerce for Los Angeles County’s Internal Services Department said, “Lead times were too long, agreement prices were often too high, and the agreements themselves were too hard to find and use.”

Los Angeles County is the largest in the United States, overseeing 4,083 square miles, two-thirds unincorporated. The geography includes packed urban areas, sparsely populated maintain ranges, 76 miles of coastline and offshore islands. The County employees a total of 84,000 people and has buyers, working out of 36 different buying locations to serve its 9.5 million residents.

To create the County’s Acquisition Management Information System (CAMIS), they selected an Internet-based system that had browser-based access. This allows even the smallest potential supplier to participate. Commerce One emerged as the winner with their Commerce Chain Solution. The CAMIS consists a Web-based automated procurement system and an extranet application that allows real-time links between the suppliers and the county. Not only does this allow automating order processing, additionally suppliers can provide product and pricing updates to their catalogs. At writing, Los Angeles County can select from over five million items from over 5,000 suppliers. Also buyers are able to compare prices across suppliers, insuring the best price for individual items.

It cost Los Angeles County approximately $2 million to implement CAMIS, but it is only less than one third of one percent of the total purchasing dollars processed in a single year. Recently, the County’s central warehouse was closed. This represents savings of nearly $30 million over five years. As paper catalogs become obsolete no sooner than they are printed, CAMIS is constantly updating.

Now that I’ve gotten your attention, what are you doing to take advantage of this trend? If you think the graphic arts supply industry is a safe harbor in which to weather this cyberstorm, think again. We are in the midst of an incredible economic revolution. The rules are changing before your eyes. Those who can see past their nose will receive the rewards, unfortunately that will not be everybody who reads this column. Will it be you?

How Distributors Profit from the Partnering Trend (1470 Words)

distributors profit from strategic alliance relationships

Distributors Profit from the Partnering Trend

Yes, distributors profit from embracing the new era of collaboration. We need banking, but do we need banks? We need groceries but do we need supermarkets? We need services and consumables but do we need to receive these things in traditional ways? Do we need distributors?

Distributors Profit

The answer is: Only if distributors truly create value in the process of getting stuff from the source to the user. At my seminars, when I ask distributors what their product is—the usual answer is service. WRONG! Your product is logistics. WalMart has done an excellent job of disintermediating those that Sam Walton believed did not add enough value to the chain. What about your customers and suppliers? What do they say about you?

My research indicates that for you to cost effectively achieve world-class levels of logistic services, you must adapt Total Organizational Partnering. I realize partnering is a term that has been grossly abused over the last decade, none-the-less; it is what you must achieve.

Partnering Defined

Partnering is an idea that is loosely used to describe anything from teamwork to alliances to contractual partnerships. Partnering, as I define it, is the process of two or more entities coming together for the purpose of creating synergistic solutions to their mutual challenges. Again, I recommend you adopt Total Organizational Partnering as your business strategy. Today’s distributors profit through embracing this paradigm.

Partnering is not a flavor-of-the-month management strategy to be hastily adopted and then as quickly abandoned, rather a long-term strategy for success. Partnering is not instant gratification! To adopt Total Organizational Partnering, distributors will need to understand the Partnering Pentad Model. A pentad is simply the name given to a group of five. The Partnering Pentad represents the five key areas of your business. In each of the five areas you must develop outrageously successful relationship (alliance) strategies. It is the quality of these relationships that hold all the areas together. Distributors profit from Total Organizational Partnering.

External Strategic Alliances

This is the area of your business where you develop alliances with outside entities for activities where you have core competencies that complement one another. For many distributors, these include buying/marketing groups and targeted specialty alliances for software/technology development. Distributors profit from sharing core strengths, tow or more can create an environment of synergy yielding all involved more than the some total of their collective contributions. Land mines to watch out for are core values of alliance members being too different; circles of interest overlap being too little, and continual management change of one or more alliance partners.

Partnering with Suppliers

Many distributors are most concerned with this area—no supplier, certainly no customer. Just-in-time delivery (JIT) and electronic data interchange (EDI) ordering have become commonplace today. Eventually, you will have these relationships both up and down the supply chain—providing you are still in business. Frequently, what I here from suppliers about their customers is, “They’re talking marriage but acting one night stand.” Not long ago I delivered an opening keynote presentation to an association of industrial distributors. Unfortunately, upon visiting the Website of one of that industry’s major suppliers, I noticed that very few of their distributors had hyperlinks to the distributors’ own Websites. I call that incredibly stupid—missed opportunity. To successfully compete in the world of B2B e-commerce, you must adopt alliances. The biggest land mine in this area is to neglect reviewing the quality of the relationship and exploring areas for improvement. What is it that you do that your suppliers cannot? Which of your activities actually adds value to your suppliers’ efforts and desire to get their goods to the end user?

Partnering with Customers

Distributors profit from incredibly close relationships with their customers. In this area, distributors profit from being externally driven. Your customers will consider you an important vendor as long as they feel they’re receiving good value. Value-added is a term that much is being written about. Integrator, Applied Distributors, is now documenting their value-added services with their customers. Agriculture and food processing conglomerate, Cargill has moved to value-based purchasing. They measure the total value proposition of their suppliers rather than just buy on price alone. You must be value driven rather than product driven to understand what your customers want. What they perceive as value is their reality. The important land mine to watch out for is short-term thinking on your part when making customer relationship decisions.

Distributors Profit from Employee Alliances

For many distributors is, erroneously a non-issue. Meaning, they don’t. What motivated the WWII generation is different from what motivates baby boomers and is different from what motivates the GenXers, and especially the Millennials. Just because something motivates you, it doesn’t necessarily mean it will motivate those of a different generation than yours. If you want your employees to have an ownership in your business—even though they don’t have a legal ownership and to hold sacred the business as you do—you must empower your employees.  Empowering means giving them the authority and encouraging them to accept the responsibility to do the job. Then acknowledge their successes and failures in an environment of safety—one where you encourage and reward risk taking. The major land mine to watch out for is the Ego Trap, yours of course. To give power, you must be a powerful person, one who possesses personal power rather than power simply acquired from your position. Permission cards and employee recognition certificates are a great start. More on these ideas are available at: https://rigsbee.com/articles/strategic-alliance-success/

Owners or CEOs as the Optimal Partner

This is the final and in many ways the most important leg of the pentad star. Not the most important from the perspective that all revolves around the CEO, but rather distributors profit from that of having a culture of true partnering. True partnering start at the top. You must lead the charge and show by your actions, more than your words, that Total Organizational Partnering is truly your preferred and accepted business strategy. The critical land mine here is when you arrogantly believe that you are at the center of the pentad and that all the alliances should revolve around you. The coveted center of the pentad star is reserved for all the relationships that bind the separate legs.

distributors profit from total organizational partnering

Distributors Profit from Partnering

Globalization

The Partnering Alliance driver for distributors profit in this new era. Large multinational companies are building alliance relationships to gobble up market shares in every conceivable industry and location. Large families of businesses are competing against one another. As such, smaller organizations feel the pressure and the Partnering trend becomes monkeys see, monkeys do. A secondary driver is based on the fact that organizations generally adopt a new paradigm based on the recommendations of others. Change evolves through one’s witnessing the success of others. Organizations and leaders with strong reputations within an industry or economy have immense influence over their contemporaries.

While I have witnessed many companies profit handsomely from alliance relationships, I have also seen them scramble to get on the partnering bandwagon with little regard for the quality of partners they select. Admirable businesses like Timex have discovered that the wrong partner can cost millions of dollars. Creating successful Partnering Alliances that will pay off in terms of increased market share, know-how or earnings diversification is no easy chore.

Today, consolidations and roll-ups are of great concern to many distributors. In the Industrial Distribution, Bill Wade stated, “The basic premise couldn’t be any simpler. Take a highly fragmented industry—like distribution—facing technological change, customer upheaval or chronic financing difficulties. Add in a few well-healed foreign firms or, worse, a couple of previously unknown competitors from outside the business. Since the industry leaders are probably family-run businesses with limited succession strategies, the next step to protect profit and continue growth is clear: consolidate.”

A consolidation or rollup, as it’s frequently called, generally occurs when an organization or individual with deep pockets sets out to buy several small companies in a fragmented industry and rein them in under a new or collective pennant. Does this sound familiar? A while back the National Association of Wholesale-Distributors reported that 42 of the 54 industries they studied had been significantly affected by consolidation. Frequently a professional management and buying strength create economies of scale that allows the consolidator to pluck the low hanging fruit in the industry. Distributors profit form significant investment in systems to eliminate the duplication of effort and inefficiencies that exist within the industry being consolidated.

If your organization is sick and bleeding, this plan will not deliver the quick results you most likely desire. As I stated, this is not a quick fix. If you lead a healthy organization, your best strategy to remain profitable and independent is Total Organizational Partnering. To protect against being disintermediated, stable and incremental improvement in all five pentad areas will deliver the most successful long-term results. Total Organizational Partnering will assist distributors profit in becoming a world-class distributor—one that adds value to the chain and understands logistics.

eCommerce Is Still In Your Future (1128 Words)

“Unbelievable, only one California distributor had a link!” In my recent opening keynote presentation for a group of industrial distributors, I mentioned that I was alarmed. Upon visiting a major manufacturer’s web site, I conducted a distributor search for California. When the list appeared on my screen, only one distributor listed had a link to their site from the manufacture’s site. It’s unfortunate that so many distributors are slow to partner with their principal suppliers. For some distributors it is because they do not yet have a web site, hard as that is to believe. And for others it is a trust issue. Some distributors still believe that by sharing information, they will loose customers. How wrong they are.

Your customers might not be getting any younger, but their purchasing staff most certainly is. With this youth, also comes new ways of doing business. Younger people are quite comfortable with the Internet and many prefer e-commerce to “bothersome” visits from your reps. Just the other day upon leaving for school, my nine-year-old son asked my wife to find him some pictures of jellyfish for a school project. He proceeded to explain to her how to go to www.Yahoo.com and so forth to find the pictures he needed. She thought it was so cute. For technophobes, it’s a wake up call!

E-commerce is taking on several forms from the straightforward Amazon.com style of giving your credit card number, selecting the items you want and receiving your purchase a couple days later via a delivery company to more sophisticated arrangements similar to what the automotive industry is putting together. I personally find CheapTickets.com both a convenience and a time saver, giving me a wonderful choice on my air travel needs. I might not have ever considered that as a possibility. But, a while back my travel agent started tacking on a $10 per ticket booking fee. Their new business strategy did not add value to our relationship in my eyes. Needless to say, I am no longer their client.

Back to the younger purchasing agent trying to work their way up the corporate latter. They are putting in extra hours, working late. Since it is late and manufacturers are closed, they go to ThomasRegister.com looking for a particular product supplier and find what they need. The manufacturer is a real partner in distribution and has distributor search capability at their web site. As with the earlier mentioned example, if there is only one distributor with a link that is where the purchaser goes. Will that be you?

Ford Motor Company is unleashing the power of the Internet for their employees around the world. It’s taking a step forward to reach its vision of being on the leading edge of technology and connect more closely with its customers. In support of this vision, the company announced on February 3, 2000 that eligible employees worldwide would be provided a computer, printer and Internet usage at home for a nominal fee ($5 a month).

Ford Chief Executive Officer and President Jac Nasser said, “This program keeps Ford Motor Company and our worldwide team at the leading edge of e-business technology and skills. We’re committed to serving consumers better by understanding how they think and act. Having a computer and Internet access in the home will accelerate the development of these skills, provide information across our business and offer opportunities to streamline our processes.”

Ford Chairman Bill Ford added, “It is clear that individuals and companies that want to be successful in the 21st century will need to be leaders in using the Internet and related technology. That’s what this program is all about.”

Michael Dell, Chairman and CEO at Dell Computer weighed in telling business leaders attending the Windows 2000 Deployment Conference in San Francisco (February 15, 2000) for the new computer operating system by Microsoft Corp. He said, “The Internet will become as fundamental to your business as electricity. Businesses will need an information technology infrastructure that possesses the same attributes of systems that provide electricity whenever and wherever needed, at the click of a switch, to power anything from a small store to an entire city.”

Dell mentioned that industry researchers forecast that 38 percent of U.S. households will have two or more personal computers by the end of this year and that by the year 2003, high-speed broadband Internet connections will be used in 33 percent of U.S. households. “In a world where every business is an e-business, Internet systems technology will no longer be just the concern of the information technology department. It will be critical to your customers’ satisfaction and ultimately to your bottom line,” said Dell.

To put Michael Dell’s comments in perspective, Dell Computer Corporation is the world’s leading direct computer systems company. This is based on revenues of $25.3 billion for the past four quarters (as of 2/15/00). Dell ranks No. 78 on the Fortune 500, No. 210 on the Fortune Global 500 and No. 3 on the Fortune “most admired” lists of companies.

This is just in from WALLY BOCK’S MONDAY MEMO — 1 May 2000 (weekly e-newsletter). Bock states, “There were lots of studies and surveys out last week that give us some insight into how we’re moving along the adoption curve of digital technology. Here is a couple. Net Portrait found that almost 60% of US households have a computer and that 47% of households have Internet access.  Some of the others just stay late at work, where Greenfield Online found that 10% of workers stay late so they can access the Internet.”

I recently listened to Tim Underhill explain to a group of distributors how their customers frequently pay three times for the same shipping and handling services in a discussion on the value of integrated supply. I sure do not want to pay thrice for a product or service, nor do your customers. In distribution today the game is adding value and streamlining costs in the distribution chain, not simply adding cost. While we are still at the early stage of e-commerce, sooner than you think, your customers will be demanding the capability of you. Will you be left in the cold?

When I started my career in outside sales in the mid 1970s, my boss, Ray Kahn told me that if I lost a major customer while paying attention and doing everything I could to keep them happy, that he could live with it. But, if I lost a major customer because of not paying attention, that he’d fire me. Was he serious? Absolutely—Mike, one of my colleagues, got the axe for just that reason. If you lose customers because you are asleep at the wheel in regards to the Internet and e-commerce, should your suppliers fire you?

Trust, the Essential Element in Building Outrageously Successful Relationships (597 words)

Trust is defined as confidence, reliance or resting of the mind on the integrity, veracity, justice, friendship, or other sound principle of another person or thing. It’s also the glue that binds an organization together. Just think what you could accomplish with your spouse, business partner, alliance partner, supplier, customer or employee if you absolutely trusted one another.

In the mid-1970s, when I worked in Yosemite National Park, I took up rock climbing. This is a sport in which one quickly builds trust with their climbing buddy. In the hands of my buddy resided my lifeline, a rope that came from around his waist, threaded through a carabineer that was attached to the rock face and tied at the other end to me. While climbing, when I slipped off a rock face and started to plunge, it was my climbing buddy that locked the safety rope tight around his waist, keeping me alive. He determined if I went crashing several hundred or thousand feet onto the granite below or if I were to just dangle in the air a few feet from where I fell. In outrageously successful alliance relationships, you must be able to trust your partner with your business lifeline.

In any Partnering alliance, trust is necessary to move from inertia to action. Trust is that wonderful, mystical and cherished virtue hoped for and shared among practitioners of the Partnering Paradigm. In trust, you’re continually putting yourself at risk. While most would prefer to drink from an emptied wine rather than hemlock bottle, it is the process of taking risks that is necessary to build outrageously successful relationships. At times you are certain to be disappointed, but hopefully these disappointments will be few, compared to the availability of beneficial experiences.

Trust is fragile and not to be mistreated. Jamie Clarke and Alan Hobson are adventurers. On their third attempt (1998), they conquered the summit of Mt. Everest. Prior that trip, they authored a book, The Power of Passion: Achieve Your Own Everests, about their earlier expeditions. A relationship-devastating situation occurred around fundamental expedition leadership and goal decisions that were overlooked before embarking on their 1994 odyssey. Each was dug in, and Jamie made a decision to fill a leadership void that Alan was unwilling to fill. About this Alan later wrote, “the most important element in any relationship—trust. Once trust is lost in any relationship, it is like a mirror struck by a stone. The glass shatters. Although all the tiny pieces can be glued back into position, the mirror always shows the cracks. They run deep and numerous.”

Trust building is a journey rather than a destination. Foster the following behaviors in yourself and look for them in your potential partner(s).

Twenty Trust Building Behaviors

1. Tell the truth.

2. Deliver on your promises and expectations of others.

3. Walk your talk and act with credibility.

4. Exhibit authenticity and sincerity.

5. Be a positive roll model.

6. Welcome responsibility.

7. Avoid offering excuses.

8. Present an ethical image.

9. No Bull!

10. Avoid gossiping.

11. Use duct tape on your mouth when necessary.

12. Be open; inform ahead if you cannot meet deadlines.

13. Help others to look good.

14. Treat everybody with respect and dignity.

15. Be consistent in how you treat others.

16. Recognize and reinforce performance on others.

17. Communicate clearly, say what you mean and mean what you say.

18. Break down barriers by giving everybody a voice.

19. Be respectful of time, yours and others’.

20. Follow up regularly and offer helpful recommendations through relationship value updates.

Developing Strategic Alliances–What’s In It for Me? (2513 words)

Reasons for Developing Strategic Alliances for Business Success are Plenty

Developing Strategic Alliances by Ed Rigsbee

(Chapter 1: Developing Strategic Alliances, featuring strategic alliance examples)

“Almost all of our relationships begin and most of them continue as forms of mutual exploitation, a mental or physical barter, to be terminated when one or both parties run out of goods.”  -W.H. Auden

Reasons and Benefits of Developing Strategic Alliances

The reasons for developing strategic alliances become apparent when you understand the benefits. This applies to businesses and organizations of all sizes. Your reason for developing an alliance could be for research, production, marketing, distribution, or management. Your increased capability for success through alliance relationships will encourage your continued embracing of the practice. The same holds true, regardless of whether you enter strategic alliances as an individual or organization. Many of the benefits create high value for different segments of the distribution chain rather than all the segments.

I’m not going to specifically tell you which benefits from developing strategic alliances relate to manufacturers, wholesale distributors, retailers and service organizations. The reason is that I do not want you to limit yourself.  As I regularly share in my seminars, innovation can be creating a new wheel or adapting another’s idea to your situation. What’s in it for you? Maybe everything listed below or maybe only a few benefits. How much benefit you receive will be a function of your self-imposed limits, or hopefully a lack them.

In developing strategic alliances, you are only limited to the quality of your alliance relationships and your imagination—be limitless!  There are seven general areas in which you can profit from building alliances.  They are as follows:

  1. Products
  2. Access
  3. Operations
  4. Technology
  5. Strategic Growth
  6. Organization
  7. Finance

Your core strengths may lend you to develop alliances in only a few areas, and that is just fine. Or, you may desire to develop alliances in many areas over time. Work hard to develop Outrageously Successful Relationships (OSRs) in all your alliances. Following, you will discover what’s in it for you, if you develop the right alliance, with the right people. You will also discover quite a number of strategic alliance examples.

Developing Strategic Alliances for Technological Sophistication

  • An exchange of technology to compliment your core strengths shores up your core weakness and improves production capabilities to better serve customers. An example of this type of alliance is the alliance of Kinko’s Service Corp. of Ventura (now FedEx copy centers) and Xerox Engineering Systems to establish a nationwide network for faxing large-format documents. This service is especially valuable to architects, contractors and advertising agencies. Kinko’s gets a revenue boost and Xerox gets additional placement and unit sales.
  • Technical hotlines and on-site technical support are regularly available from suppliers with whom you’ve developed alliances.
  • To receive a technological contribution or possibly a technological edge in your industry like the alliance between IBM and Apple to develop a new computer operating system that allows both hardware formats to communicate, or like Nynex Corp. and Philips Electronics who joined to develop screen telephones for residential use.

Developing Strategic Alliances for Training

  • Learning curve commitment. Cost savings are passed along as experience is gained in producing a new product, and discounts are available on start-up products to encourage early sales.
  • Better sales and technical training for your employees is an important benefit in partnering with your suppliers. More manufacturers and distributors are developing training programs for dealers. Guggenheim Dental, a dental supply distributor inHawthorne , CA is now regularly offering training programs for their top customers. Recently, at a seminar I delivered for the National Nutritional Foods Association, I suggested to the retailers that they only buy their nutritional supplements from suppliers that offer training videos. This is an added benefit in the seller/buyer relationship.

Developing Strategic Alliances to Increase Market Share

  • Co-branding such as snack manufacturers who are now mixing two nationally known names and logos on a single product. Examples of this are Betty Crockers’ Soda-Licious, soda pop fruit snacks, made with 7UP and 7UP Cherry.  Also, is the popular milk chocolate-covered Pretzel Flipz by Nestlé featuring Rold Gold pretzels.
  • Access to new markets both domestic and international. Copeland Corporation joined with the largest compressor manufacturer inIndia , Kirloskar, to bring air conditioning to a growing middle class.
  • You will find that partnering can provide the benefit of positioning for future needs not yet known to you or your industry. An example, a lead-user firm is one whose present needs will reflect its segment’s needs in future months or years. Through partnering, one company can assist another in leapfrogging current industry leaders. Cooperating with newer firms more willing to pursue a riskier development strategy to gain market shares does this. This strategy can aid companies, large and small, in more rapidly and efficiently reaching their collective goals.
  • Additional business to justify operating a production facility. In developing strategic alliances with competitors, you might do the production for both.  This is similar to retailers that have a store brand developed by the recognized national brand manufacturer.
  • Opportunity to develop a private labeling or branding identity. American Dental Cooperative in Nashville has been successful in this area as has Power Heavy Duty in the heavy-duty truck repair industry.
  • Sales lead and help in procuring new business. Brian Potts, a VP at 3M recently made this offer to his strategic building service contractor customers at their CEO retreat in Mexico . He detailed how other 3M divisions are most likely are selling the customers that the contractors seek and how they could take advantage of those already established relationships.
  • Opportunity to expand business with new or related product innovations and service offerings. Later in the book I’ll tell you about how Helen Chavez at La Tapatia Tortilleria did this.
  • Preferred supplier status as Steelcase in Grand Rapids , MI , awards to suppliers that have proven their performance abilities.
  • Reduce direct competition as the Sun/IBM alliance has attempted in creating the Java operating system to keep Microsoft at bay.
  • To gain market share, Lexus and Coach, the New York-headquartered manufacturer of fine leather products teamed up in an exclusive partnership to produce the Limited Lexus ES 300 Coach Edition.
  • Geographic expansion is what happened to Ronald Fink’s West Palm Beach , FL company, RGF Environmental Group, following a trip to Asia with other local CEOs and Ray Reddish, a senior management analyst at Florida ’s commerce department. Within 18 months of his trip he had hired 14 new employees just to handle his Pacific Rim business. Some states aggressively partner with local manufacturers to expand exporting there by increasing state revenue.
  • Create marketing synergism to the consumer through cross promotion like Blockbuster and Dominos did. Blockbuster held a promotion that required a customer to rent three movies and in return receive a $10 savings book for Dominos Pizza. Both partners received increased traffic through the joint promotion. This can easily be done at the local level between, as an example, the drug store and the dry cleaners.
  • Barriers to market entry by a new player. This protects the current players as with GTE and Pacific Bell in Los Angeles . They partnered to serve UCLA in a method that closed an opportunity to a new provider attempting to enter their market.
  • Marketing assistance to support order volume for products as when a small company develops an alliance with a large company.

Developing Strategic Alliances for Improved Customer Service

  • Improved attitude toward customer service. This starts from top management on down the chain of command. Many manufacturers are partnering with their dealers and retailers. When the dealer makes a long-term buying commitment to the manufacturer, the manufacturer helps the dealer in customer service tools and training.
  • Improved customer loyalty was developed by United Airlines through their alliance with Starbucks. United now serves Starbucks gourmet coffee to their passengers at 30, 000 feet. And they do it in cups bearing the logos of both companies.
  • Improved product offering becomes possible through alliance buying cooperatives. Additional product lines become available to the members because of the cooperative’s buying strength.
  • Barnett Gershen, CEO of Associated Building Services in Houston builds alliances with his customers through his quarterly review method.  Once a quarter he sits down with his customers and asks for a grade or score as to the quality of service his company delivered. He then looks for tactics and strategies to improve his service.
  • Through alliance relationships, many businesses have found strategies to provide better and quicker customer service while keeping their costs manageable. Look for companies that have a similar customer base to yours and enter into a discussion about how to work together.

Developing Strategic Alliances for Innovation

  • The computer and electronics industries have profited greatly from alliance relationships. Innovation has become commonplace for firms that have chosen to work together. The University of Toronto ’s Innovations Foundation signed an agreement with Northway Explorations Ltd. and Polyphalt, a private Ontario , Canada company, to deliver polymer-modified asphalt materials technology for longer lasting roads to the commercial market.
  • To differentiate oneself from the competition. Steelcase’s alliance with Peerless Lighting, located in Berkeley , California , offers state-of-the-art office lighting. The relationship has brought Steelcase an additional $15 to $35 million in annual furniture sales. Also, they received additional dollars from the light fixture billings.

Developing Strategic Alliances for Cost Savings

  • In manufacturing elements of your product or entire product that could be built in plants (owned by others or in joint venture) with up to date technology, cost savings can be great.  Sharing resources, or outsourcing, rather than owning and operating a manufacturing plant, will allow a synergistic partnering agreement allows you concentrate on your core strengths. This is the idea behind the Donnelly Corporation and their venture with Applied Films Laboratory, Inc. for manufacturing and supplying the world market in display coated glass for liquid crystal displays (LCDs).
  • In distribution, access to orders that can be economically and efficiently produced also that generates reasonable profit through alliance relationships.
  • Shared locations such as Bank of America and many other banks across the country are that are locating branch offices in suburban supermarkets. They are saving resources while simplifying the lives of their consumers by reducing the amount of their consumers— daily running around.
  • Wal-Mart has a partnering alliance with Ronald McDonald, in their recently completed Wal-Mart store in Oxnard , California . Proudly displayed, are signs on the store’s entrance doors announcing, McDonald’s inside and a life-size plastic Ronald, who sits inside on a bench to greet customers.  Stores within stores have become commonplace through alliance relationships.

Developing Strategic Alliances for Financial Stability

  • Partnering in a poor economy or recession makes good sense especially, when sales are flat and prices are deflating.  Continental Airlines accessed optical industry consumers by partnering with Swan Optical, Inc., an industry supplier, to increase business through an air travel discount certificate program for purchasers of optical frames supplied by Swan.
  • Access to capital is a primary reason for smaller organizations developing alliances with larger ones.  An example on a huge scale was when Chrysler went to the U.S. Government seeking loan guarantees. On a smaller scale, Bruce Bendoff, CEO of Craftsman Custom Fabricators, Inc., Schiller Park, IL, a 275-employee sheet-metal bending company learned how to grow through trusting a corporate behemoth—Motorola.
  • Achieving economies of scale is possible in alliance relationships when partners share facilities, equipment and employees.
  • Prompt payment per agreed terms is a standard in customer/supplier alliance relationships.
  • More potential profit is generally the outcropping of shared resources.
  • Alliance relationships allow partners to share the financial risks associated with developing new products and entering into new markets.

Developing Strategic Alliances for Buying Parity with Giants

  • Working together, American Dental Cooperative members, dental distributors are successfully purchasing goods in parity with the two giants in their industry.
  • Additional discounts and services for in depth marketing and technical expertise.  Win/win pricing becomes possible in long-term buyer/seller alliance relationships.

Developing Strategic Alliances for Supply Chain Improvements

  • Just-in-time inventory purchasing and supplying as exemplified by the famous relationship between Wal-Mart and Procter & Gamble.  Home Depot and Dell Computers have also built powerful alliances with their suppliers for cost saving just-in-time inventory.

Additional supply chain improvement areas available through strategic alliance relationships:

  • Management of supply channel conflict
  • On-time product delivery
  • Prompt response to complaints
  • Greater consistency in parts, supplies, semi-assembled, and completed products
  • Detailed agreement as to handling of product problems and customer complaints
  • Improved supply chain productivity
  • Specific (quarterly, yearly, etc.) volume commitments
  • Key contacts that are dedicated to your account
  • Improved supplier loyalty
  • Prompt response to quote requests and price problems
  • Confidentiality of shared business strategy

Developing Strategic Alliances for Productivity Increases

  • Productivity increases are also achieved through partnering alliances.  In a three-year study of Brown & Root/Braun’s alliance with Union Carbide Corp., Danbury , Conn. , B&R/B concluded from 18 projects that productivity on partnering jobs was about 16% to 17% better than previous levels.
  • The Arizona and California Departments of Transportation have so successfully discovered that the partnering approach benefits many industries’ experience, especially, the construction industry, by eliminating the tangle of claims, litigation, and adversarial relationships through a concept of cooperation throughout the life of a project. Identifying potential relationship hazards early was another benefit. Bench marking (companies sharing information on what they do best), especially in the aerospace industry, has shown increased productivity and decreased costs across the board.
  • Putting some pleasure and fun back into business. Jim Eisenhart, president of Ventura Consulting Group, Inc., Ventura , California, says that the big benefit of partnering is it puts pleasure and fun back into the construction business.  He says people are now open to partnering because they recognize the limits of old adversarial paradigms.

Some additional productivity increases that are available through strategic alliance relationships:

  • Market intelligence relating to new products, processes, and competitive technologies and markets.
  • Market forecasts for large orders to allow intelligent production schedules
  • Improved product quality
  • Improved working relationships
  • Improved communications through structure to promote operating efficiencies
  • Improvement of products/services
  • Sharing of information
  • Improved culture and business philosophy
  • Recognition, award and/or reward system for meeting and/or exceeding established goals
  • Reduced Paperwork

Ultimately the benefit to developing strategic alliances with others is for solutions through mutually beneficial efforts.  Together you can solve your problems, those of your customers’ suppliers’ and employees’.  Be sure you know what it is that you are want to get out of each of your alliance efforts!  It’s rare that a company can be all things to all people.  Working in cooperation with others is the solution.  Adopting the paradigm of strategic alliances will get you much closer to your goals than without these valuable relationships.  Finally, and decisively important, when a company embraces the philosophy of strategic alliances, the result will be improvement in quality, productivity and profitability.  And yes, this is done through cooperation and collaboration.

“Togetherness, for me, means teamwork. It makes us reflect how completely dependent we are upon one another in our social and commercial life. The more diversified our labors and interests have become in the modern world, the more surely need to integrate our efforts to justify our individual selves and our civilization.”    -Walt Disney

ABCs Of Buyer/Seller Relationships (1474 words)

There are basically three levels of buyer/seller relationships. The first and most common relationship level is Adversarial. This is the traditional win-relinquish relationship where you, the buyer, squeeze your supplier for the very last bit of a discount. You are determined to get the last drop! You are not focused on the cost of doing business with one another, just what you believe to be the lowest cost. This is a transactional only relationship.

Next is the Barometric relationship. In a Barometric buyer/seller relationship you are always checking the atmospheric pressure. This relationship is still being monitored and measured closely. Generally you have not yet developed a high level of trust with one another. It could be a single source relationship, but with a short length contract. While this relationship can grow and flourish, it can also sour quickly. Few people thrive with others constantly peaking over their shoulder. In this type of relationship, each side must still engage in CYA (cover your assets).

The highest-level buyer/seller relationship is Complementary. This level is where true integral Partnering takes place. At this level the visions and values of each overlap with one another. There is a true alignment of values in place. Each understands the needs of their alliance partner and works hard to help their partner get what they need while likewise serving their own organization.

  • Value-based purchasing,
  • Sole-source relationships,
  • Vendor Managed Inventorying (VMI),
  • Just-in-time (JIT) shipments are made successful through trust and
  • Electronic Data Interchange (EDI) at this relationship level.
  • Complementary Contractor/Distributor Relationship

An example of Complementary buyer/seller Partnering is the relationship Universal Systems developed with Graybar through Graybar’s local branch. Universal is an electrical contracting company and Graybar is a distributor of electrical supplies.

In 1996, Gene Dennis, President at Universal Systems realized his company had a problem. His supply inventory was out of control. Through the assistance of Parviz (Perry) Daneshgari, Dennis set out to make a change. Daneshgari is president at MCA, (an implementation company in Michigan), an adjunct professor of automotive engineering science at the University of Michigan-Dearborn and Oakland University’s School of Management and the author of The Chase, (1998, Black Forest Press, San Diego, CA) a business novel about process implementation. Dennis decided he wanted to be a construction company without owning and handling any material. This was a lofty goal as traditionally the stocking of electrical supplies was a cornerstone of the business.

He needed a supply partner. His choices were a local supplier and Graybar, a national supplier with a branch in his community. He leaned toward the local supplier until he showed up at their place of business unannounced. “We were held hostage,” said Dennis (Electrical Contractor Magazine, July 1998). The problem was that the president was not in and the employees didn’t know what to do so they put Dennis and his team in a conference room. In contract, when he showed up at Graybar unannounced and the branch manager was out, all the employees knew about Universal looking for a supply partner. The staff at Graybar showed him and his team around at once. Upon closer inspection, Dennis learned that Graybar’s on-time deliveries had been 29 percent higher than their competitor. Graybar was selected for the sole-source arrangement.

Graybar agreed to take ownership of Universal’s existing in-site inventory. An on-site inventory was maintained and orders were placed via Graybar’s EDI system and invoices were generated from Graybar’s St Louis headquarters monthly. Universal realized approximately $60,000 the first year through eliminating delivery trucks, inventorying and other personnel savings. Graybar offered additional benefits as the relationship progressed. Before the partnership, Universal had to pay extra for shipping their frequent emergency orders. In the partnership Graybar maintains a standard list of commodity items at the local branch and if they don’t have it, Graybar pays the shipping.

What’s in it for Graybar? “Instead of wondering how to get the order, now we sit in on job meetings, try to find ways we can help, and look for cost and process savings,” says Jim Estis, a local Graybar account representative (Electrical Contractor Magazine, July 1998). Chatting with Dennis late October 1999, he said, “Partnership is covering the backside of each other—each looks out for one another.”

The following are Daneshgari’s steps to form a vendor partnership and criteria for selection, which Universal Systems used. Dennis and Daneshgari outlined these when they presented their success story at the 97th Annual National Electrical Contractors Convention in Las Vegas, Nevada, October 1998.

Steps to form a partnership:

  1. Develop a scope of work.
  2. Send out requests for proposal and interview potential vendors.
  3. Review proposals.
  4. Create a short list.
  5. Make unannounced tour of vendors’ facilities.
  6. Evaluate finalists.
  7. Selection.
  8. Negotiate an agreement with your selected vendor.

Criteria for Vendor Selection:

  1. Purchase existing stock at retail value.
  2. Establish a branch at Universal Systems.
  3. Have an inventory management system.
  4. Work toward continuous improvement process.
  5. Use EDI for billing.
  6. Have a delivery process.
  7. Use periodic evaluation process.
  8. Contract termination clause.
  9. Product warranty and liability.
  10. Maintain property damage insurance.
  11. Aggressive pricing strategy.
  12. Maintain stocking inventory.
  13. Maintain workers’ comprehensive insurance.
  14. Offer single point of contact.

(Used with permission of Parviz (Perry) Daneshgari)

Complementary Distributor/Manufacturer Relationship-Fuji Factor

Fuji Photo Film U.S.A, Industrial Imaging Group has the right idea. They are true partners with their distributors. Fuji Photo Film is a manufacturer that supplies the graphic arts industry, supplies for printers. Among the major suppliers to the industry, Fuji is by far the most advanced in building quality relationships with their dealers. Much of the success is attributed to Stan Freimuth, president at Fuji.

The Fuji factor is a model that more manufacturers should embrace and more purchasers should demand of their suppliers. If you were a distributor, wouldn’t you rather have a supplier relationship that could grow and improve over time? This is only possible with the right kind of supplier. The key elements to Fuji’s success are as follows:

  • Limited number of dealers offering their products to their market. While approached by virtually every non-Fuji dealer (distributor) in 1997 due to industry manufacturer consolidation and pressured to add their preferred dealers by national accounts, Freimuth had to make some hard decisions about his dealer network. He responded, “The net result of all this has been minimal changes to our dealer network. As most of you know, we have pretty tough standards that must be met before we will sign on a dealer. We only want strong, well-run companies who are willing to do business the way that we want to do it, and be complementary to our existing dealers.” (Access Fujifilm Graphic Systems Division newsletter, Fall 1997)
  • Manufacturing products of the highest quality with zero defects as the norm.
  • Builds tight relationships with their limited dealer network. In his letter to distributors, Freimuth states, “Last month the Graphic Systems Division hosted the Partnership 98 Conference in Greenville/Greenwood, SC. As many of you already know, this is a meeting where key dealer personnel (whether they be field sales reps, branch managers, electronic imaging reps, etc.) meet and interact with members of the GSD [Graphic Systems Division] management staff. It’s a chance for all of us to listen to each others concerns, get to know each other better and tour our state-of-the-art manufacturing facility in Greenwood.

We have been doing Partnership meetings in one form or another since 1992 and I am still impressed each time by the interaction between our two groups. At that first meeting in 1992 I remember the overriding sense among the attendees that we were all helping to shape something that was completely different in our industry. The concept of a manufacturer/dealer meeting with a free and open exchange of ideas (let alone mutual respect for each other) was unheard of at the time.” (Access Fujifilm Graphic Systems Division newsletter, Spring 1998)

  • Seeks constructive feedback from their dealers and acts on the ideas shared.
  • Consistency of leadership; Freimuth has been the president since 1983 when Fuji opened shop in the United States. Other companies in their industry have had numerous changes in leadership during that same time period.
  • Accessibility; several dealers attested to the fact that they could pick up the telephone and easily reach Freimuth.
  • Trust; when I asked about building quality relationships with his dealers (Spring 1999), Freimuth said, “It doesn’t come easy, it’s hard work.”

Regardless of the scope of your relationships, work with your suppliers to build Outrageously Successful Relationships. TheComplementary relationship level may take longer to develop than you may hope, but the close relationship delivers value. This foundation will allow you to PartnerShift throughout your organization and benefit from your effort.

What Suppliers Say About Buyers (850 words)

I recently delivered a partnering presentation to the National Association of Chemical Distributors at their annual meeting. A couple months before the meeting, I visited the convention chair, Pat Marantette, at his Southern California business, E.T. Horn Company, to learn more about the industry. One of the things he told me was that he was more concerned with the relationships with his suppliers than the relationships with his customers. He went on to explain to me that without his suppliers, he was out of business.

In thinking back on the visit, asking how important are suppliers to your business success is an important question. The following is excerpted from my latest book, PartnerShiftHow To Profit from the Partnering Trend. I believe you’ll be asking yourself questions in reference to the relationships you enjoy, or do not enjoy, with your suppliers.

At the Building Service Contractors Association International’s 1997 Chief Executive Officer Seminar in Los Cabos, Mexico, one of the suppliers to the industry was assigned to present a presentation based on what the suppliers in general said they did not like about the contractors, their customers, actions. While Rob Kohlhagen, senior market development manager at SC Johnson Professional delivered an exceptional presentation, I’m not sure he ever forgave me for assigning him the task. Admitting the comments came from only one industry, I believe they are universal, as they have applied to most of the industries that I have counseled or studied.

Power manifests through knowledge. It is important to know what your suppliers have to say about you. Completing Relationship Value Updates are important, as they will help you to avoid some of the following problems and open a conduit for communication. Remember, you can learn from another industry’s problems. Below are listed the three general areas of complaint from the contractors’ suppliers. Also there are some of the specific comments offered about the contractors. Their comments point out universal issues that suppliers have with their buyers. Most will apply to your industry. If you explore issues you might have with your own customers, there is a good chance your suppliers could have similar issues with you.

       Fear of commitment

“They are not willing to single source but still want our total bundle of value-added resources at no additional cost.”

“They focus on reducing price rather than reducing cost.”

“They like to shop around regularly to satisfy curiosity . . . they are afraid that we will abuse the relationship.”

         “They want direct prices but local service.”

         Operations level support

“We get commitment from top management but the program gets derailed at the operations level.”

“Top management is reluctant to mandate changes to operations . . . they try to build consensus but it doesn’t happen.”

        “Operations people have their ‘personal favorites’, old recipes they swear by that they will do anything
to hold onto (including sabotaging the partnership initiative).”

“The partnership is conceived at the executive level but the lower level departments are never convinced that it is in their best interests too.”

        Communication breakdown

“Everyone is so busy we only communicate when there is a need for fire fighting . . . hence the relationship takes on a negative tone over time.”

“We never discuss mutual opportunities . . . it’s always, “How do we fix what isn’t working?’”

“We talked about the importance of communicating at all levels: executive, operations, purchasing, training, risk management and quality assurance but there is no structure established to make it happen . . . so it doesn’t.”

“The chemical supplier cannot partner independently with the building service contractor. There is an interdependence between the chemical and equipment and supply manufacturers but there is no communication link established between us.”

Interdependence is an idea that carries much power. From the Harvard Business Review, July/August 1994, “Active collaboration takes place when companies develop mechanisms, structures, processes, and skills for bridging organizational and interpersonal differences and achieving real value from the partnership. Multiple ties at multiple levels ensure communication, coordination, and control . . . more communication than anyone anticipated is necessary.”

Thomas Gale, editor at Modern Distribution Management, has his opinion about the integrity of some customers. From the November 10, 1994 issue, “And while many customers are talking about integrated supply partnerships, there are (and will always be) customers that are ultimately seeking price reductions, playing one distributor off another, without a willingness to explore how a true partnership can save money for the customer while providing a fair profit for the distributor.”

Developing a conduit for communication is not difficult but frequently overlooked in many industries. The Internet makes this even easier. Some industry associations are providing this service through members’ only sections on their web site. More trade and professional associations are helping to create this type of multi-function participant forum, but not enough. This area is a tremendous opportunity for associations to add a very high-level of value for their members. Continue the dialogue with all stakeholders in your business.

Receiving Value (324 Words)

“What’s in it for me?” This is the old tape that continually runs in your mind when another person suggests you accept their proposition—both in business and your personal life. While their offer could be any one of an array of possibilities, your tape still plays. Allowing this freewheeling mind tape to control you is weak positioning on your part. You are abdicating your control. Why give others the power to determine the value you need is a particular situation?

The key to receiving usable value from others is to achieve clarity on what creates value for you and/or your enterprise. A good method to determine this is to take inventory of your core or perceived weaknesses. Then decide what products, supplies, tactics, capabilities and services can help you to shore up your limitations. These can be buy/sell transactions, value-added situations and/or alliance relationships.

Armed with clarity in understanding what value is to you, you can filter every offered proposition through your needs window. Look at the total value package being offered. This includes the cost of acquisition, cost of ownership or usage and the value-added services. If services are added or bundled into a package that do not create value for you, do not be fooled into believing the value-added is free. If you are offered something you do not need, do not accept, regardless of how good the deal seems.

Areas in which your enterprise could receive value:

  • Strategic alliances with competitors
  • Supplier alliances
  • Customer alliances

Keep the power to determine what you consider to be value. Rather than say, “What’s in it for me?” a better approach is to know what you want or need and ask for it up front. Asking for what you want on the outset can lead to getting what you want. Getting what you want is much more powerful and valuable than taking what others offer.