By Scott Newton
In the medical device business, the partnership between manufacturer and distributor is critical. Although we all enter relationships with the best of intentions and want to believe that we are working collaboratively, too often that’s not the case. That’s okay when all is going well, but when it’s not, you can quickly see that a lack of collaboration was the culprit. Collaboration allows us to stay on the same page, work towards common objectives, and foresee potential challenges before they become significant issues.
Over the years, I’ve assessed several manufacturer channel strategies that weren’t meeting expectations or producing the desired results. Time and time again, it’s apparent that one of the key factors is that the relationship had developed into one of transaction, not collaboration. The manufacturer provides the product, the distributor sells the product, and each adds their numbers and measures their results independently of one another.
Of course, no one sets out to NOT be collaborative, so how do you know if your partnership is truly one of collaboration and not one that’s simply transactional? Here are three symptoms I’ve seen that you may want to investigate if you see them in your partnership:
- Your Key Performance Indicators (KPI’s) are not aligned.
Have mutually agreed upon performance objectives been established? During business reviews, are your KPI’s measured using a shared metrics? Or is the manufacturer only focused on their sales to the distributor and the distributor only focused on sales to end-users? - You only know what your distributor buys with little or no knowledge of marketplace activity.
This lack of transparency about what’s taking place in the field is a sure-fire way to tell whether the partnership is based on trust or not. Distributors inherently are protective of their customer base but can easily provide market intel as well as pipeline and performance details without risking access to confidential proprietary information. - Your Business Reviews are infrequent and less than effective.
Communication and collaboration go hand-in-hand. If partners are simply waiting for the next business review to discuss progress, that leaves too much time for issues to go unnoticed and unaddressed. Collaboration requires continual communication, which is why when we developed myCaribou, we felt it was critical to offer workflows and tools allowing partners to “sing from the same song sheet” to inspire effective, timely and continuous communication. Schedule a demo today to see how myCaribou’s workspaces enable real-time communication and collaboration between channel partners.
If you’re concerned you might be stuck in a transactional relationship, the good news is that it can be possible to change the partnership into a more collaborative one. In every case I’ve seen, the advantage of a more collaborative working relationship benefits both manufacturer AND distributor.
It’s natural for distributors to be reluctant to share data and information. But, in fact, when communications are respectfully open, we’ve seen the opposite occurs: the more aligned the KPIs and more transparent the process, the more growth and profit for both parties.
I know of one distributor that when at risk of losing a major supplier, took the bold step of initiating QBRs and increasing visibility to their market-based activities. Sales improved, and trust was gained on both sides. As a result of the renewed collaboration between manufacturer and distributor, the valuation of the company was enhanced leading to an acquisition by an eventual buyer. In true collaborative fashion, it was a win-win-win for everyone.
Learn more about myCaribou’s channel optimization tools to ensure consistent, clear communication with your channel partners.