Last month I wrote about customer business planning (CBP). It clearly struck achord with many suppliers facing the challenges involved. I will answersuppliers’ key questions here with some of our CBP principles at Sentinel MC.
The hottest topic is how to navigate the closing of one year at the same timeas setting up the next for joint success. It’s crucial to have no collision ofinterests and no late surprises.
Aligned interests through agreement of joint targets that balance short-term,long-term, internal and external priorities is vital. The right analysisindicates not only the best KPIs and targets to unify both parties, but alsohow they will be achieved.
Suppliers shy away from including retailer profit as a KPI. The reality is thattopline turnover, retailer profit and retailer margin will always feature atthe top of the retailer’s list. If you don’t have these KPIs in mind, you arenot being realistic about a joint approach.
How to work with suppliers
It’s important, though, to recognise a supplier’s role in contributing tothese, without taking accountability or underpinning them. Equally, of course,there should be a supplier volume element – driving investments to give theretailers skin in the ‘joint’ game.
Never enter retailer margin-maintained deals. So many have done this, and itallows retailers to mess with pricing willy-nilly, knowing suppliers will makeup their profit.
To avoid ‘you owe me’ surprises in the last month of the year, total upfrontcommitment to tracking/review processes and relentless measurement ofperformance is needed. This should be against not only KPIs but also thebuilding blocks to achieving them.
Year-end wrangling fundamentally indicates you are not in a trust-based processthat fosters sustainable planning. The boom-and-bust annual plan is apower-play tactic by the retailer, in which they build a supplier’s competitorin alternate years. It can be avoided through medium and long-term KPIs.
Our work with suppliers over 20 years has proven the pivotal nature of a reviewmechanism to invoke ‘in-plan’ contingencies. Early ‘we are off track’conversations can only happen with top-level commitment to check steps. Evenoff-track reviews can be positive conversations about adding further top spinto the performance and team recognition. Both help build trust for asustainable approach.
Another major question suppliers are asking is how far they should work onjoint planning when the customer is not making it easy. The answer is ‘not toohard’. The more important thing is to have a methodology that works regardlessof the customer’s input, then continuously demonstrate how better collaborationcan make it easier for bigger and better plans.
Keep the outputs simple, regardless of how analytical and rigorous the inputsare. Where there is rigorous data, use it – but then ensure it’s reviewable onthe same format as a simple small-customer brain-to-page approach.
Great customer plans shouldn’t be a Christmas miracle. But the fight for marketshare across all grocers is at an all-time high, and CBPs are set to rise inimportance still further.