Winning the Supply Chain Management (SCM) game requires that multiple channel partners change how they deal with each other. The goal of the change is to increase share by working together toward a significantly enhanced offering at the end-user level.

Taking the Enterprise Test

To do this, both firms create a concept of an ENTERPRISE that represents the combined ownership of both firms. Practices, activities and costs within both firms are examined to determine if they would still be appropriate if the ENTERPRISE existed. Real SCM initiatives consist of eliminating those activities that fail to pass the ENTERPRISE test. An example would be manufacturer sales reps calling on distributor buyers to purchase lunch, build relationships, and load them up with excess product.

Discussion Guidelines for Channel Partners

In early discussions it is often hard for partners to recognize that different behaviors are required. Therefore, these guidelines were developed to help manufacturers and distributors improve the results of early SCM conversations. It is based on Indian River's extensive experience in facilitating these discussions. The guidelines are:

If both sides disagree on what is important to a customer, both sides are generally wrong. Speaking about customers in groups is very dangerous as they are usually data-free discussions.

1. Basing decisions on customer information gathered and processed by employee sales people will usually be wrong as the data will have unknown biases.
2. Negotiating is inappropriate, and often very destructive, to the process until the end game when the general game plan has been agreed upon. At that point, the overriding question that will guide decision making is: what is best for the Enterprise and which supply chain partner can perform a needed function effectively at the lowest cost?
3. Bi-directional confidentiality agreements should be signed and both sides must find some new and previously company-confidential information to share with the partner. Personal trust is the most critical ingredient in any successful SCM initiative.
4. If the initiative is going to be successful, both sides need to speak directly and frankly about their respective willingness to invest money and people into the endeavor.
5. that typically yield high payoffs for low risk help to generate early successes and build mutual trust and confidence. Some of these areas include: getting consumption data from users back to producers; reducing channel inventory; eliminating negotiating at the transaction level; getting production scheduling data to downstream partners; and determining how much inventory is in the channel.
6. Both partners need to identify their own internal champion who has a vested interest in the success of the project. This tends to work best when the individual is not an executive. However it is crucial that the internal champion has clear and direct access to the key executive.
7. The best output of early discussion efforts is a series of pilot projects. Success of pilot projects is driven by the following characteristics:

• Documentation in less than five to seven pages.
• Expected outcomes that are clearly stated and detailed.
• Measurement criteria agreed to and established in advance.
• Expiration dates that are clear as well as an agreement to share post-action information.
• Review dates, key events and timelines that are clearly documented and measured.

Time passes quickly, the pilots are over, and the partners are wiser than when they started. Building on early mutual success, they can employ their newfound wisdom and knowledge in the creation of competitive advantage.

Indian River Consulting Group is an experienced based firm specializing in Distribution. Started in 1987 by Michael Marks, a current DREF Research Fellow, IRCG has specialists who consult with distributors and suppliers to make the changes necessary to maintain competitive advantage. You can contact them by calling 321-956-8617, or visit www.ircg.com for more information.

Copyright © Indian River Consulting Group LLC. All Rights Reserved.

Please contact Sandie Stewart at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it for republishing permission.