Manage Troubled Relationships
A Mini Case Study With Tips
Several months ago, a Middle Eastern health and wellness distributor asked us to intervene with a North American supplier. Essentially, the supplier which owed them a large shipment of goods had been acquired by another North American supplier.
The acquiring supplier denied the distributor’s claim to the goods, stating that they had not acquired the liabilities of the acquired company. The situation was set to escalate in a very negative fashion.
Tip #1: Do not ‘evergreen’. Evergreening in this context means spending money to hide or ineffectually fix the problems of an already made troubled investment.
The distributor was extremely upset, wanting either the original paid-for shipment, or returned payment. They understood from our earlier counseling that, in their specific circumstances, the costs of cross-border legal proceedings would likely exceed any recovery.
Tip #2: Point to the common benefit in moving forward. In rocky situations, it is often better to focus on future positive outcomes of turning around the situation, rather than taking an adversarial tone.
We contacted the supplier, and told him this was an incredible opportunity to work with a premier regional distributor. Instead of viewing this as an antagonistic situation, we suggested he seize the opportunity to establish sales distribution in the region without investing the vast resources that other suppliers have had to in order to obtain such opportunities.
Tip #3: Avoid taking a narrow transactional perspective in any relationship. The potential value creation is not limited to the transaction at hand, but is also in the ten or one hundred transactions that can follow.
We suggested that the supplier consider putting in place a distribution agreement with the distributor and not charge for the first shipment of goods as a gesture of goodwill. Thus, he could establish a very profitable Middle East distribution channel. Thinking beyond the contentious small shipment to the bigger picture could mean dollar signs for his company.
Tip #4: Bring in an external perspective. This can help identify outside-of-the-box solutions, and move things in a positive direction when two parties are no longer able to speak without increasing their acrimony.
Before the conversation, the supplier was ready for a battle, and afterwards, he was keen to build a profitable relationship. He even wanted to learn about working with SH International, moving this beyond a win-win situation to a triple win!