How can you make sure your business deals and partnerships are set up for success?
Can you believe we are only three months away from 2022? Through the last 18 months we have seen so much disruption that time has flown by. So much has changed. Retailers dealt with pandemic shutdowns, furloughed employees and new COVID-19 safety regulations, then were hit with the labor shortage, which caused record high open job positions while simultaneously declining retail employment rates.
But we can’t count retail out as more stores open up and e-commerce spending increases. In fact, the upcoming holiday season is positioned to be one of the most critical seasons for retailers as the e-commerce revolution barrels ahead and more and more consumers enjoy flexible options like Buy Online Pickup In-Store (BOPIS) and next-day delivery.
With all the hardships and constantly changing trends, staying afloat is top of mind today. But retailers can’t afford to delay preparing for tomorrow.
New Year, New Business Deals
Every year, traders sit down with business partners and suppliers to discuss business terms and conditions for the upcoming year. But if we’ve learned anything since March of 2020, it’s that the presence of disruption is the only thing that’s truly predictable.
So how can you make sure your business deals and partnerships are set up for success? I suggest following these four best practices for the all-important negotiation period.
Tip 1 – Think Proactively
Don’t wait until the negotiation kicks off or crisis sets in to determine what your business requires from its partners.
Take the time before negotiations to analyze your brand’s operations, determine how vendors or suppliers can best fit your needs and define your strategy.
Are you opening any new locations this year? Upgrading your e-commerce offerings? Introducing new technology to offset the labor shortage? These questions should be assessed internally, and the answers should be brought to the table at the start of negotiations as opposed to trying to work them in last minute as changes arise.
Tip 2 – Don’t Be Afraid to Comparison Shop
Part of the process is comparison shopping. As consumers, we comparison shop all the time online, so it’s no surprise we seek to compare offers during business negotiations too.
Are you working with the partner that is best equipped to help you protect margins? Are they flexible? Do they share ideas to boost sales with promotions? Are they able to mitigate disruption from shipping crises and/or continued restrictions brought on by the pandemic?
You spend your time and money innovating, so your partners should, too.
It’s important to find a supplier or vendor that’s ahead of the curve and will help your business stand out from competitors. You know what your customers need, so make sure you’re working with the best partner for the job.
Tip 3 – Test Scenarios
One way to prepare for the future is to learn from the past.
Retailers should analyze past negotiation successes and failures and use them to conduct “what if” scenarios for future deals with their business partners. These simulations can help you compare costs and the impacts that various factors would have on margins and profits.
Category managers and the finance teams can adjust values to calculate margins on individual items, product categories, or entire assortments. For instance, if the supplier must raise the price on a critical manufacturing material, will it break the bank? If so, can you adjust the negotiation now to avoid the situation altogether?
The visibility provided by these simulations helps retailers make data-driven decisions to ensure profitability, even during renegotiations amid an unprecedented event.
Tip 4 – Prioritize Transparency
Negotiations are a two-way street, so both parties must have easy access to the terms and agreements.
All interactions between partners should be recorded and kept in one easy-to-find place that is accessible to everyone. Digitizing the entire agreement management process creates one source of truth which can reduce miscommunication and minimize errors throughout the partnership.
For more on transparency, check out this article shared by gicom.
Thinking of 2022 and Beyond
By following these four tips, you’ll set yourself and your partners up for success. Ironing out the details of a partnership can protect margins, improve customer satisfaction and ultimately boost profits.
These tips will help your organization thrive in 2022, but the benefits don’t stop there. With heightened transparency into agreements and an enlightened view of all partner relationships comes an easier and more efficient decision on whether to renew, or not renew for the following years, as well. Ultimately, you may want to leverage the relationship to a true collaboration.
But I recognize that preparing for the future is easier said than done. gicom’s solutions can help you manage agreements, calculate and settle claims consistently. We’ll even advise you on the implementation of pricing strategies to help you optimize your margins and boost your profits. Message me today if you’re interested in learning more.
What struggles have you faced in the agreement lifecycle stage? Have the expectations you have for vendors or partners changed during the pandemic?
By Stefan Hilger
Published on LinkedIn: 4 Ways to Prepare for 2022 by Strengthening your Agreement Lifecycle Management | LinkedIn