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How Supply Chain Partners Can Overcome Misalignment

How Supply Chain Partners Can Overcome Misalignment

April 6, 2023
Only 10% of distributors report strong alignment between themselves and trading partners. '

Manufacturers, distributors, and retailers have a long history of needing to overcome siloed data streams, friction in workflows and misalignment in goals.  A new report, Overcoming the Misalignment Driving Friction Between Supply Chain Partners, released by Enable on April 3, found that in order to work more effectively together, repair trust and form stronger, longer-lasting relationships, trading partners need to collaborate with each other. The results in the report are based on a survey of nearly 250 manufacturers, distributors, buying groups and retailers.

Key insights from the report:

  • Distributors and manufacturers face significant misalignment
    • Only 10% of distributors report strong alignment between themselves and trading partners. Data indicates that where alignment is strong, relationships are also strong.
    • Approximately half of all distributors report a lack of alignment about 50% of the time; meanwhile 76% of manufacturers report alignment between them and their trading partners. This is the collaboration gap, where one partner feels more left out than another.
    • 40% of manufacturers say they review goals monthly but only 23% of distributors report the same, resulting in a schism between what manufacturers believe they are communicating and what distributors perceive they are receiving. This gap must be addressed if trading partners are to achieve more success together.
  • Supply chain pressures have polarized relationships
    • Approximately 40% of distributors and buying groups report stronger relationships in spite of recent supply chain disruptions.
    • 60% of manufacturers say that their relationships have remained stagnant or grown weaker.
    • Only 25% of retailers believe their relationships have grown stronger.
  • Most organizations aren’t managing their relationships with legally binding agreements or contracts
    • Only 8% of buying groups and distributors manage all their relationships with legally binding agreements. Nearly half of all manufacturers manage 50% or fewer of their relationships via contracts. These findings are reinforced by a McKinsey survey, which found that companies that collaborate effectively across the supply chain have enjoyed dramatic reductions in inventories and costs, together with improvements in speed, service levels and customer satisfaction.

“We were surprised to learn how siloed data really is between trading partners,” says Andrew Butt, Founder and CEO of Enable, in a statement. “Not only are trading partners not working off contracts designed to clearly delineate terms, they’re not communicating as effectively as they think they are.

"These two issues act as force multipliers when it comes to the friction that naturally exists between companies trying to do business, compounding that friction exponentially. Thankfully, collaborating more closely together offers trading partners a means by which they can lower this friction and achieve stronger trading relationships. The data is clear: when trading partners work closely together, they see more success. In the coming years, close collaboration will mean the difference between success and stagnation.”

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