Retailers and suppliers have long understood that they work best when they work together. Unfortunately, they also acknowledge that there’s real room for improvement in that area. 

In a report from the Industrial Performance Group, 82 percent of manufacturers and 92 percent of distributors cited problems in their working relationships for cutting into their sales and profits.  

Those are avoidable losses that companies can no longer afford, especially given the challenges presented by today’s marketplace: pandemic-driven supply chain disruptions, shrinking product life cycles, and rapidly changing consumer preferences among them. 

These are obstacles that all businesses are facing, regardless of where they fall on the supply chain. The more closely that retailers and vendors can partner to navigate them together, the better the outcomes will be for both parties.  

Here are five areas where strong buyer-supplier collaboration creates strategic advantages. 

Growth and Profitability 

An extensive McKinsey survey of over 100 large companies across multiple sectors found that the ones that most collaborated with suppliers had higher growth, greater profitability and lower operating costs than their competition. Close collaboration also fosters longer-lasting partnerships, which allow buyers to consolidate the suppliers they work with and save money by reducing costs through leveraged spending and economies of scale. A Hackett Group study found that the most successful companies stay laser focused on maintaining strategic supplier relationships. These top performing companies had 2.3 times fewer strategic suppliers than their peers, but dedicated 2.7 times more resources to each supplier. 


Collaboration offers the opportunity to bring fresh eyes to a product, and can help create goods that are more precisely targeted toward consumer trends. It can also help bring those products to market faster to capitalize on those trends. Many major brands have altered the materials or ingredients of their products based on vendor input.

Minimized Risk 

Suppliers and buyers can also work together to reduce costs and risks for both parties. Collaboration enables simplified and more standardized product designs, which can be cheaper to manufacture and assemble. Simplified designs also reduce the risk of mistakes during the production process, and reduce costs associated with complicated assembly systems and managing large inventories of product parts.

Reduced Management Costs 

For retailers, there are considerable costs associated with each vendor. Centralizing suppliers reduces the number of contracts that need to be negotiated as well as the number of transactions they must track and the processing costs associated with them. Having fewer orders to track also reduces the administrative work associated with them. 

Data Sharing and Continuous Improvement 

Few things are more valuable in business than data, and close collaboration is a dependable strategy to collect it. Partnerships give both parties access to information related to product quality, deliveries and shipping and billing, and other insights that can used to help supply chain professionals make smarter and more strategic decisions, improving forecasting and sharpening marketing messaging. It’s no wonder that two thirds of suppliers say that data sharing has significantly helped their relationships with buyers. 

Strategic sourcing requires having the right tools in place. TradeBeyond is a cloud-based multi-enterprise platform serving retail merchandising and the private-label supply chain from concept to delivery. To learn more about how TradeBeyond enables open costing while connecting all operations without your organization – from line planning, product development, sourcing and quality to logistics – contact us today.

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