As we have previously discussed in this space, great relationships between a Consumer Packaged Goods company and a contract manufacturer have many factors. This is an important topic, because so much of the success found in solid business-to-business engagements is built on the relationship of the parties involved.
For many companies that rely on solid co-man/co-pack relationships to support incremental capacity needs or innovation efforts, there has never been a more crucial time to count on great relationships than during the crazy year that we now know as 2020! Whether you were among the many that needed relatively instant incremental capacity, or among those whose businesses faced a severe disruption in a negative way, your position with supplier partners—more specifically, your relationship with them—went a long way in determining how your business has navigated these unusual circumstances to date.
Let’s return to our list of some of the most critical factors that determine a successful business relationship. By now, I trust it’s becoming a familiar list indeed!
· The provision for SAFETY
· The power of TRUST
· The purpose of HONESTY
· The place for NEGOTIATION
· The price of “SKIN IN THE GAME”
· The protection of the BRAND
· The promise of CONFIDENTIALITY
Having covered the first four factors in previous columns, we will now take a look at the next couple of these relationship “pillars.”
The price of ‘skin in the game’
I wondered if we should call this section, “Who’s going to pay for all of this?” You see, great relationships have more give than take, and it comes from both sides. So, deciding in advance that you will or will not carry some of the risk or financial burden of a new engagement can be an important factor to consider. Some customers expect a provider or supplier to carry all the risk. And, if those customers have a large enough business proposition to offer, they may find a receptive partner—even with that stipulation in place. The truth is that most ventures involve risk and uncertainty. So, why would it be unreasonable to expect both parties to share in the risk whenever possible?
See: CPGs: Build Relationships for Contract Packaging Success
Many relationships begin from a place of uncertainty. In the world of co-man/co-pack, uncertainty may be about the product offering and its volume promise from the customer. Or, uncertainty may exist if the package and/or product offering is stretching the supplier’s capability beyond familiar parameters. Like our previous discussions on honesty and negotiation, open and transparent discussions about “skin in the game” can ensure that a new relationship is built on a foundation of openness. Because, openness leads to trust, another of our key factors for success!
The protection of the brand
“But, Robby, I’ve already got plenty of skin in the game. It’s called my brand!” Yes, you may have plenty of skin in the game via a solid, well understood, and beloved brand. I know how important brand protection is to my company. I have also heard the warnings before that we have to be sure to protect our brand. So, I get the concern.
However, I also think we need to understand that “brand protection” works both ways. When you align with a co-man or co-pack partner, and you are confident in their capabilities, and their honesty, and all of those other factors, what must it say to them when you lean in really hard on your fears about protecting your brand. Remember, they have a brand to protect too! And, while it may not be a broadly recognized brand in the eye of the consumer public, you can bet they feel quite vulnerable when it comes to the risk of a mistake that taints your brand. One need only to review certain food recalls or major brand mistakes to realize that those involving co-mans or co-packs took down, or at least severely tainted, far more than the brand appearing on the store shelf!
See: The Purpose of Honesty; The Place for Negotiation
I guess I’m trying to say that we all need to understand that we all have a brand to protect. So, let’s not maintain a posture (mental or otherwise) that the protection of our brand is necessarily more important than the protection of our partner’s brand. After all, we are trying to all succeed together, right?
I hope these columns have provided you with an opportunity to consider a broad group of ideas and factors that can lead to better relationships. In future columns, we will put a bow on the list as we discuss confidentiality. I will also offer a few more areas of thought or consideration that go beyond just relationship building, but blend ideals and practical needs into more successful engagements. In the meantime, may we all keep the needs of our partners and others in mind as we determine our next steps through these unique times.
Robby Martin is Engineering Specialist for Bush Brothers & Company.
