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Explore the benefits of customer and supplier partnerships

4 min read


Many companies have discovered the virtue of partnering. When they don’t have all the skills or resources needed to truly delight customers, it makes sense to partner with a company that can contribute those missing pieces.

Wal-Mart and Procter & Gamble (a key Wal-Mart supplier) are among the firms that have made this discovery. The challenge is in getting two (or more) different and separate entities to act as a single aligned enterprise in the interest of shared customers. By making their processes and systems seamless in service to those customers, two parties can create greater value for customers and for themselves.

Consider the Wal-Mart/P&G story. These two giant companies knew that they weren’t serving customer needs as well as they should. Each considered how they could work together to do better. To explore that question, we facilitated a meeting in which 30-some senior people from the two companies entered into a dialogue. They quickly realized that each had different ideas about what Wal-Mart customers wanted.

As the Wal-Mart people saw it, customers wanted everyday low prices with no sales, promotions or coupons. The P&G people held the opposite view. These two perspectives explained in part why the companies were failing to optimize their relationship in service of Wal-Mart shoppers. Through a partnering dialogue, the two parties agreed on policy and process changes that would better align their efforts and deliver greater value to customers and to themselves. Those changes resulted in a 300% increase in P&G sales through the giant retailer over an 18-month period. And, of course, those sales were rung up on Wal-Mart cash registers.

Partnering like this can take the supplier-customer relationship to a new and higher level and improve each partner’s work processes. Here are five questions that you and your partners should ask one another in order to work together more effectively:

  1. What do you really need from me?
  2. What do you do with what I provide you?
  3.  Are there gaps between what I give you and what you need?
  4. What problems might I help you with?
  5. Am I providing things you don’t need?

Answering these questions will help you and your business partners to help yourselves. A natural gas company we worked with did just that with outstanding results. Since gas is a commodity product, this company’s discussions with customers had revolved almost entirely around price. The gas company’s president wondered if there was a way to break out of that constrictive arrangement. So, using our partnering dialogue with one of his major customers, a utility company, he learned that gas storage cost was one this customer’s highest costs and biggest headache.

The company president asked the utility, “If I can change my processes to deliver gas in ways that will reduce your high storage costs, will you pay me an above-market price for it?” The utility was agreeable and the math worked out favorably for both parties. The gas company repeated this win-win arrangement with each of its larger customers.

Here are a few more tips for partnering with external and internal customers:

  • Bring customers into your organization to meet face-to-face with people other than sales.
  • Use social media technology to link internal functions with external customers.
  • Ensure that meetings whose purpose is to improve processes include representatives of the affected functions.
  • Map each major process’ value chain to identify internal suppliers and customers.
  • Then bring them together with the goal of better understanding each party’s requirements and how each can add greater value.

George H. Labovitz and Victor Rosansky are the authors of “Rapid Realignment: How to Quickly Integrate People, Processes, and Strategy for Unbeatable Performance.” Labovitz is the founder and CEO of ODI, an international management training and consulting company and professor of management and organizational behavior at the Boston University Graduate School of Management. Rosansky is co-founder and president of LHR International. He has more than 25 years of experience as a consultant helping Fortune 500 clients to drive rapid strategy deployment and alignment. For more information about the book, visit