It's that time of year when distribution businesses are putting together next year's sales plans, operating plans, budgets, and financial forecasts.
I've always believed there's another important part of that process that deserves more attention: planning with our customers and suppliers.
We spend a lot of time figuring out what we want to accomplish internally. But how much time do we spend understanding what our key customers and suppliers are planning, and where we can improve the way we work together?
A Conversation Worth Having
One of the most productive conversations I've had with both customers and suppliers revolves around pricing, costs, and profitability.
Everyone wants competitive pricing. And everyone needs to make an acceptable return.
I've always been comfortable having a candid conversation around a simple question:
"If I have to be a low-price provider, what can we work on together to help me be a low-cost provider?"
It's a good question. And I've found it opens up all kinds of possibilities.
With suppliers, we might look at purchasing volumes, freight, packaging, lead times, or inventory programs.
With customers, it might be order patterns, delivery schedules, material handling, or how we coordinate work.
The point is to find ways to take cost out of the business, improve efficiency, and make the relationship more profitable for everyone.
And don't leave those conversations at the conference table. Put the agreed-upon actions and initiatives into your written business plans. Give them some ownership and follow up throughout the year.
Getting the Fundamentals Right
There's a lot of attention on AI and automating workflows across distribution today. I think we all see significant potential and opportunity.
But before we automate more of what we do, we should be asking whether we're doing it as efficiently as we can in the first place.
Better coordination with customers and suppliers, better processes, and a clear understanding of where costs can be reduced all make a difference.
Technology can help us move faster. But knowing what needs to improve still takes leadership.
One Final Thought
Annual planning shouldn't stop at our own four walls.
Bring your key customers and suppliers into the planning process. Have open conversations about costs, pricing, expectations, and opportunities to improve how you work together. Then put those discussions into actionable business plans that complement and align with your sales and operating plans.
At the end of the day, strong business relationships aren't defined by the financial terms of the agreement alone.
They're built by understanding each other's businesses, working together to find better ways of doing things, and making the relationship more productive and profitable for everyone
