Is Joint Business Planning a Dying Art or a Growth Differentiator?

\"\"An issue we\’re starting to hear more and more about is Joint Business Planning (JBP).  We started hearing rumblings just before the NAED National from some larger distributors and manufacturers that

  • the planning process was taking too long (not getting done until late Q1)
  • field planning was not as strong as it historically was (there\’s an correlation between the quality of planning and the level of management of the planners), and
  • development of a plan is great but that if there is no commitment to execution, then the time is wasted.

Given this, we launched a survey just prior to the NAED National to meeting participants.  Our email stated:

As you meet with your manufacturers (or distributors) this week at the NAED National, we’d like you to ponder the state of joint business planning (JBP) with your key partners.

The NAED National represents an opportunity to discuss Q1 performance and assess the joint plans that were developed by your team earlier this year.  The question becomes, Has it been effective?”  If the answer isn’t a resounding yes, then the next question becomes “How could the planning process be improved?

Over the past couple of months we’ve spoken with a number of distributors and manufacturers who are frustrated with the JBP with key suppliers. In many instances it is companies (or perhaps people) cross-talking and not listening, there is a lack of specificity of information that can drive joint planning and a lack of actionable initiatives (and creativity) that both parties buy-into.  And then there is the issue of pushing planning / implementation down from the executive suite / meetings to internal departments and into field initiatives.  JBP, for many, is only an exercise in joint sales targeting, not a holistic planning process that drives top AND bottom line results for both parties.

Perhaps there is a need for change (at least that is what we’re hearing from some).  We’re not talking about a “one-size fits all” but a preferred partner planning process.

So, as you think about your confidence level in achieving joint plans, consider how the process could be improved. 

And we launched this survey.

We\’ve generated some responses to the survey but also had a number of conversations with manufacturers and larger distributors (regional players, $50M+ distributors).

  • Many of the manufacturers commented that they do planning with the chains but there are significant challenges, on both sides, of getting the messaging / plans pushed down the internal chains of command as well as customizing the plans to fit regional / local needs.
  • Distributors broke into two camps. One that sees value in planning but want to see it improve from their suppliers and recognize that they (and the manufacturer) need to improve.  The other side essentially says, \”why do strategic planning with a supplier?\”  In this instance they prefer to do regional / local sales account planning (specific targets) or set sales goals solely to satisfy establishing rebate objectives.  In this scenario they essentially are saying \”we\’ll handle development of the plan to achieve a number with you so we can earn more rebate.\”  And, in these instances, the local manufacturer sales organization is content as 1) it requires less work on their part and 2) perhaps it enables them to spend more time other places.

Since then we\’ve also:

  • Spoken with a couple of distributors who directly correlate strategically planning with their successful growth with selected, key, lines that have driven their company\’s overall growth.  In fact, one VP Supplier Relations said that they plan with 6-8 non-commodity lines.  They look for companies that work with distribution (vs heavily focusing their sales organization on end-users) to generate demand, have strong agencies that are important to the distributor and have selected distribution.  Organizational, holistic (sales, marketing, operational and financial) planning is done.  In fact, this person recommended that any preferred supplier should have a planning process, should do it with selective people in a marketplace (not everyone) and that rebate programs should be differentiated based upon if there is a plan or if hope is the plan.
  • Had conversations with a couple of manufacturers who are already starting to think about their 2017 planning process!

And we understand that one marketing group removed supplier joint planning from its member / manufacturer process.
Yes, the planning process can be improved.  The questions become:\"\"

  • Should strategic joint business planning be important to the distributor / manufacturer
    relationship?
  • Is there a correlation between planning and goal achievement?
  • Can this be a business differentiator?
  • Should there be different levels of planning based upon joint agreement of importance of the relationship … and hence possibly appropriate differentiation in rebate compensation?
  • How can the process be improved? What do you want from a planning process (process and information)?

Let us hear your thoughts.  And please take our survey.  Survey respondents will also receive a copy of the results.
 

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3 thoughts on “Is Joint Business Planning a Dying Art or a Growth Differentiator?”

  1. Dave,
    One of the ignored issues is the opportunity and direct costs of planning. It takes real time and resources so the distributor needs to be a major player for the manufacturer and vice versa. The answers for those firms will be very different that everyone else. For the everyone else category my view is that it is empty activity to fill out forms to make senior executives feel good.
    CYA, Mike

    1. Mike – I agree with you. Companies should consider different levels of planning (including no planning and/or goal setting for rebate programs – a la the marketing groups) in their process. The other challenge, for many companies, is forcing themselves to differentiate among their distributors. Other than the national chains, which ones are strategic, regionally important or can help them move the need in the marketplace … and which ones really represent potentially alignment (in the field, vertical markets, operationally, have marketing support, etc).

  2. I believe proof exists which points to the value of joint planning. Like every resource, joint planning needs to be targeted. Manufacturers selling us products need to be classified:
    1. Profit Partners– these are the suppliers who account for day to day profits. They work closely with your team to grow business today and provide the revenue flow that supports your business.
    2. Strategic for immediate growth – these are suppliers that allow you to produce growth and revenue next year. Often these are product lines on the periphery of your current sales. For example, an electrical distributor might produce immediate growth by working with a vendor of electrical safety equipment. Just a little attention today could produce growth without a great deal of training and positioning. These will never make your top 10 suppliers, but adding a couple hundred thousand to the top line sale is not a bad thing. (By the way, I recommend setting a minimum growth amount to make this list. This varies from company to company but $100K in two years is a good starting point.)
    3. Strategic for long term growth – these are companies which drive your company into the future. They stand in place to be major producers sometime in the next 5 years. As our world changes these manufactures are emerging technologies which position your company over the longer haul.
    4. Customers want them so we keep them around – suppliers that you would like to convert their sales to something else but customers keep asking for the brand. Some manufacturers have strong brands but employee saturation distribution. They bring little strategic value to your company, the margins may be low, and they do little to improve your place in the market.
    5. Line fillers– we all have them. We take orders for their products but don’t really proactively sell their products.
    6. Don’t know why we have them – do little for us and occupy a small place in our catalog and on our shelves. We probably would have severed ties but just haven’t gotten around to it.
    Once you complete this exercise, it’s pretty easy to see where you need to think about joint planning.

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