Compliance problems that trigger invoice deductions are often the result of communications problems between suppliers and customers. Suppliers want to reduce margin pressures. They often make small changes to integration processes. And business changes can make initial incentives counterproductive. These (and other issues) are usually unique in their particulars.
But their root cause is poor communication, which can be easily overlooked. When sales reps and buyers talk on a regular basis, it can seem that everything is going along fine. But many times these issues require more than the routine exchanges of information and relatively predictable concerns. Small issues that are overlooked can easily grow into big ones that trigger a negative action.
Fortunately, such outcomes aren’t inevitable. When both suppliers and buyers understand some underlying issues that face both parties, many problems can be avoided. And two keys to avoiding unforeseen problems are visibility and insight.
It’s easy for suppliers to agree to follow a set of rules provided by buyers. But that agreement must be understood as just the first step — and a step that usually involves only a few people. When more people get involved in an attempt to follow the plan, interpretations of the guidelines can differ. Different people often have different ideas about the best way to get things done. Also, the original meanings of the agreement can be understood differently.
The particulars of how to achieve better communication will differ depending on context, but one common element may be simply providing greater visibility through the supply chain digital processes. A retailer can provide timely POS transaction detail, for example, enabling suppliers to make necessary adjustments based on a greater ability to predict trends. More visibility, in short, usually results in more flexibility — and better results.
Suppliers are often reluctant to open up their processes to retailers. They may fear that sharing of information is a strategic weakness — a retailer could suss out lower costs, for example, and demand lower prices. At the same time, most retailers simply don’t want to know the details of their suppliers’ business.
If retailers look closer, they’ll gain more insight and understanding. And a supplier can be encouraged to disclose their processes more in the context of a trusting relationship. Such a relationship must begin with the assumption both parties are intelligent and have good intent. Trust, obviously, takes both time and effort, but such time and effort will result in better a better relationship between suppliers and customers — and greater profits for both parties, too.