In our recent report, Overcoming the Misalignment Driving Friction Between Supply Chain Partners, we surveyed almost 250 manufacturers, distributors, buying groups and retailers about how they collaborate on their trading agreements. We wanted to know where their points of friction were, what caused them and why they persisted.
This pursuit uncovered some startling results. What we discovered was a widespread and deep-rooted sense of misalignment between trading partners existing at almost every level of the supply chain. Mounting pressures and obstacles have put unprecedented strain on relationships between manufacturers, distributors and retailers, driving collaboration down as an increasingly connected digital world demands it.
In this blog, we’ll take a look at some of these findings and explore how these pressures are impacting trading relationships across the supply chain.
Two-thirds of manufacturers say that their relationships have remained stagnant or grown weaker
Supply chain pressures and other external stresses can lead to severe internal issues: specifically gaps, inefficiencies, errors and ambiguity in your processes. Major disruptions in the supply chain, as we’ve seen in the aftermath of the COVID-19 pandemic, can lead to serious operational problems both within and between businesses. When the supply chain is damaged, our processes and trading relationships quickly begin to break down at their weakest points. Communications wither, priorities like “transparency” and “alignment” are sent packing and strategies for mutual growth are jettisoned in favor of individual survival.
These conditions are not exactly conducive to the continued growth of strong trading relationships – far from it, in fact. With the majority of manufacturers reporting stagnant growth or negative impacts to their trading relationships,
Only 25% of retailers believe their relationships have grown stronger
Unfortunately, things aren’t looking much better for retailers. With only 25% of respondents reporting growth in their trading relationships, retailers are facing similar impacts to their trading relationships. The external pressures weighing on retailers’ relationships can likely be attributed to several sources, from lingering effects of the COVID-19 pandemic to rising costs of fuel and labor – the supply chain is struggling from top to bottom.
However, while this trend is startling, a surprising find among our results showed that it’s not exactly ubiquitous.
Approximately 2 in 5 distributors and buying groups report stronger relationships
Despite these mounting pressures, not all trading relationships are suffering. In a surprising turn, we found that 2 in 5 distributors actually reported stronger relationships with their trading partners in light of the adverse circumstances they faced together.
Even the most difficult market conditions can serve as fertile ground for strong and long-lasting strategic partnerships. When trading partners band together during times of trouble to align their goals and collaborate on mutually beneficial trading strategies, they build a sense of trust, loyalty and mutual growth that endures.
Despite pressures, most industries feel positive about the future
When we break down the data by industry, a surprising trend emerges: despite these unfavorable conditions, most hold a neutral to positive outlook for the future. Many industries expect to see positive growth over the next year, and most see their relationships either maintaining or gaining strength.
In particular, the pharmaceutical industry stands out as holding one of the most positive outlooks among the industries we surveyed, with 71.4% of respondents reporting stable trading relationships and a whopping 85.7% expecting positive growth in 2023.
Overcoming the pressures facing supply chain partnerships
Challenges abound in the current state of the supply chain, and it’s clear that these pressures are weighing on the very trading relationships that hold it together. These external stresses can cause unnecessary friction and misalignment that weaken the essential foundations of your trading relationships: clarity, communication, transparency and collaboration, making it harder to grow together.
However, it doesn’t have to be this way. The first step in ridding your trading relationships of these problems is recognizing them. Once you bring the sources of misalignment and friction into the light, you can collaborate with your team and trading partners on ways to resolve them and bring your relationships back on track.
We explore these pressures, as well as how you can resolve them, further in the full report which you can download here. Don’t let your trading relationships suffer unnecessarily – discover what’s holding them back and take steps to strengthen them against supply chain unpredictability.
