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May 5, 2020

What's next | Supply & distribution agreements

Goods supply arrangements can range from one off supplies, to regular supplies of regular quantities through to an understanding about how a variety of goods might be ordered and supplied from time to time. Distribution arrangements deal with many of the same supply issues but often also seek to ensure a wider availability of goods possibly over a number of markets than the original goods supplier might be able to manage themselves. Because of the overlap it makes sense to look at supply and distribution arrangements together.  

In a time when the supply chain is less certain for everyone assumptions about ease of supply need to be tested. Testing these assumptions will also test the personal relationships between parties that will become more important than is perhaps usually the case – at a time when businesses are needing to work harder to survive we are all going to need our friends.

Table presenting the assumptions and considerations for supply & distribution agreements.

Like all business relationships the parties to a supply arrangement or a distribution arrangement will have entered into it as a result of an assessment of what the other party stands for and their ability to perform.  

In current times when some of our ability to perform is outside of our control and where people’s values may be tested in unexpected ways it is good to reassess the underlying assumptions made in supply and distribution arrangements to ensure they reflect what you see as important. This is equally true for the other party to your agreement.

We are all likely to go through some challenging times and so it is good to open a dialog with your trading partners to ensure that there are plans in place and a clear understanding of what is important to the success of the relationship in each partner’s eyes. Once this is done then that understanding can become the foundation for the “new normal”.

This article has been co-authored with Simon Martin as part of his "What's Next" series.

Check out this video where Simon and I discuss some of these points in relation to Supply & distribution agreements.

Social media image credit: Guillaume Bolduc

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