What Happens if Customer & Channel Relationships Go Wrong?
Many companies are becoming increasingly dependent on fewer and fewer accounts. Some try to change this dependency, while others work hard to further increase the profitable business they derive from the accounts on which they depend. It is important for suppliers to have a balanced portfolio of accounts or to choose their relationships very carefully if survival is not to be jeopardized. New, profitable accounts take time to develop, so many companies will still find themselves putting their eggs into a few baskets. These baskets must be watched closely indeed. What if the relationship ever starts to go wrong?
How best to manage the relationship without resorting to court, as in the case of Firestone tires for the Ford Explorer, or inventory seizures, as some suppliers did with Eatons, the venerable and now bankrupt Canadian department store chain?
It is right that customers and suppliers blur the lines between where one ends and the other begins. This is one sign of a good relationship. It is also appropriate that, in the event of a failure of one firm, the other is also affected. Were this not the case, and value creation carried with it no mutual downside, it is unlikely that the future of the relationship would be pursued with equal intensity by both supplier and customer. At issue is the process for governance of the relationship. What are the conditions that need to trigger resolution? Slow payments? High prices? Defective products? Slow resolution of outstanding issues? Insufficient new, pro-active value creation? Change of management at either the buyer or seller? Governance processes should be designed to ensure that the mandate of the relationship is well described at the outset and that there is joint commitment to this mandate. Trigger points should be identified to ensure that the relationship gets back on track rather than terminally damaged. Consider using independent third parties to help structure a governance policy that can help sustain the relationship through thick and thin. This third party could also help secure buy-in to the policy from both your company and your customer or channel partner, and serve as an independent facilitator of the process if issues continue and escalate.