The 2020 Mid-Year Economic Update_long

Tip: Improve Information Exchange, Partnership Over Rebate Structure

Initiate the conversation with a goal of mutual benefits.

The rebate structure that has defined the manufacturer-distributor relationship for many years is changing. Some changes are already taking place, but there are steps that help smooth the transition, says Mike Workman, long-time industry expert in Manufacturers Rethink Rebate Structure.

First, determine which two or three major players your company would be best served to align with and start the conversation with them. "Don't wait for the manufacturer to come to you," Workman says.

For many distributors, those changes are shifting relationships and destabilizing the lines between profit and loss, Workman says.

Then, ask the manufacturer what they need. "Ask them what are the three or four or five critical changes they need to see in the marketplace for us to do business effectively two or three years down the road?" he says.

In addition, some manufacturers have shifted the focus on volume-based rebates to a demand-driven model.

Read more about how to redefine the rebate structure in our premium article, Manufacturers Rethink Rebate Structure.

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