Managing your trading partner relationships is a delicate task that requires skill and finesse, especially when you’re tackling rebate programs. There may be times when you and your partner agree about your rebate programs, and other times when you do not. This misalignment can begin to disrupt even the most efficient and carefully planned collaboration initiatives.

Think of your collaboration effort as a finely tuned machine, operating smoothly towards its ultimate goal. Each instance of friction is akin to adding sand to the gears, causing them to grind and decelerate until the entire mechanism comes to a halt. Yikes! Not a situation you want to be in.

How do you overcome that friction? Or, better yet, avoid it entirely? In this blog post, we have compiled a range of suggestions to assist you in eliminating or avoiding such friction.

Understanding the Causes of Friction

• Lack of communication

Efficient rebate management can be greatly hindered by inadequate communication. When communication between trading partners is insufficient, it can result in misunderstandings and conflicts that create obstacles to smooth operations. In fact, poor communication is often the fundamental reason for misunderstandings between trading partners.

In our State of Volume Rebates report, 36% of distributors reported experiencing inconsistent updates and poor communication. Such communication breakdowns can cause delays at critical stages of deals, potentially resulting in missed deadlines and damage to relationships or reputations for both parties involved.

It’s important to align expectations between you and your customers regarding communication. How often will you reach out? Weekly? Monthly? Semi-annually? And how will you communicate? Strictly via email, or will you have regular meetings to discuss your shared progress toward goals and any concerns that may arise? Answering these questions will help you maintain better communication with your trading partners, reducing friction.

• Conflicting goals

Divergent priorities or objectives for rebate programs among trading partners can result in disagreements and hinder their ability to collaborate effectively towards a shared objective. According to our report, while 40.4% of manufacturers review their goals on a monthly basis, only 23% of distributors do the same. This mismatch in approach may exacerbate tensions over time.

When goals aren’t aligned, your trading programs aren’t working for you. It’s important to regularly sit down with your trading partners and ensure your incentive programs are structured around the goals you both want to meet.

• Late payments

The global economy is significantly affected by late payments, unpaid invoices and the resulting cash flow difficulties. Meanwhile, calculating and paying out a rebate involves several complex stages. Due to the use of inaccurate spreadsheets, finance teams may find themselves buried in administrative work, leading to payment delays. Payment delays often cause tension and friction—no one likes when they don’t receive their payments on time.

• Human errors

Human error is responsible for over 80% of supply chain disruptions, and this risk increases as businesses grow and analyze large amounts of data. Because spreadsheets rely on manual data entry and manipulation, they are highly susceptible to human error. This makes them particularly vulnerable to mistakes in rebate calculations and reports, which can ultimately harm your credibility and trustworthiness with your trading partners.

• Siloed data

In most supply chains, data silos are a common source of friction that can impede trading partners from making accurate and informed decisions about their rebate programs. Data siloes create inefficiencies between trading partners, leading to delays in production and delivery. Data silos also decrease visibility, making it difficult for trading partners to assess challenges in a timely manner.  

Ultimately, data silos prevent trading partners from working together as seamless extensions of each other. Silos force trading partners to rely on their own data and can confuse objectives, preventing partners from joining forces to achieve shared goals.

Strategies for Making Collaboration Frictionless

• Set clear agreements

Creating clear and comprehensive agreements that outline expectations, responsibilities and consequences is crucial to building strong trading relationships. Our report on overcoming friction between supply chain partners revealed that only 8% of buying groups and distributors manage all their relationships through legally binding contracts or agreements. The absence of a contract can make it challenging to hold your trading partner accountable for agreed-upon goals, especially in the context of rebate agreements where payment obligations need to be enforced.

• Establish transparent communication channels

Transparent communication with your trading partners involves being honest about your goals and working towards a common objective. By sharing information openly, both parties can align their goals and work collaboratively towards achieving them. It is essential to ensure that everyone has easy access to the terms of the deal, and partners are aware of when they are approaching a new pricing tier to avoid any confusion or misunderstandings.

• Promote a culture of trust

To build a culture of trust, it is important to foster a relationship based on close collaboration, joint business planning and alignment around mutual business objectives. This involves identifying key partners and working closely with them to develop rebate agreements that benefit both parties.

• Foster continuous improvement

Creating frictionless collaboration between trading partners is an ongoing process that requires continuous evaluation and refinement. It is important to regularly assess the collaboration process and identify areas for improvement. By implementing changes and optimizing the process, you can reduce friction and create a more efficient and effective trading relationship over time. It is crucial to maintain a proactive approach and a willingness to adapt in order to achieve long-term success.

Using Technology to Overcome Frictionless Collaboration

Maintaining visibility over your rebates can be an arduous task when dealing with multiple systems, ranging from spreadsheets to emails to external platforms. When it comes to managing rebates, it is crucial to view it as a truly collaborative process, rather than piecing together various components.

Investing in a collaborative rebate management platform can significantly reduce friction with your trading partners. With a collaborative platform, all parties can gain visibility over the same set of data, enabling them to work together seamlessly towards their common objectives. By eliminating the need for manual input and consolidation of data, a collaborative platform can streamline the entire process, leading to more effective collaboration, better decision-making, and stronger business relationships.

Discover more features of this platform here.