Although Joint Business Planning in its purest form seems to have gone out of fashion in some quarters, the need for suppliers and retailers to develop joint plans remains, and as a topic it continues to be one of the most challenging for both sides of the fence. The central challenge remains – how to balance the desire for a long-term (medium-term seems more realistic) joint plan with the everyday fight or flight instinct driven by the need to publish strong quarterly figures to the stock market, the pressures from the competition on price and now the higher costs of imported goods.


The purpose of this thought piece is to provide my answers to some of the questions I often get from clients and provide some practical advice for those who are thinking of entering into such agreements or indeed are already involved in them.


What’s involved in Joint Business Planning?


JBPs are annual agreements undertaken by suppliers and retailers. These agreements detail all the activities which both parties commit to deliver over the following year, and the financial benefits which these activities will deliver to both parties. These typically are: turnover, volume, cash margin and margin percentage.


The JBP is not the same as a promotional plan or even a Category Plan for the year ahead. It should be a far more holistic, cross-functional and multi-level process which can encompass such items as:


  • New Product Development
  • Co-Marketing activities, for example joint outdoor or TV advertising
  • Cost saving projects, for example related to packaging, product specification or logistics
  • Service levels
  • Vendor Inventory
  • Promotions and Merchandising, including multiple locations
  • Category projects including shopper insights and leading to innovative category merchandising and even changes in store layout
  • Exclusive arrangements related to brands, products, packaging, promotions
  • In-store sampling activities
  • Training in store staff

The list above is not exhaustive, however it serves to highlight the complexity involved in some of the more sophisticated joint business plans. Joint Business Planning can take a great deal of time, resource and capability for both sides. That’s partly why some companies are moving away from comprehensive JBPs toward more streamlined versions.


A JBP should be about engagement, a strategic alliance, a mutual commitment to working together to maximise the maximum potential value for the long term. It is about sharing resources, ideas and capabilities to optimise the benefit for both parties. It requires a different mind-set: fundamentally, this can be summarised as working together, rather than working against each other.






Types of JBPs


While JBP has become a generic term, in reality the term covers a multitude of agreements, unified by them being some kind of mutually agreed plan for the following year.


Figure 1: Types of JBP

As Figure 1 illustrates, different types of JBPs can be mapped out according to two main variables: the range of activities covered by the agreement, and the range of functions involved.


Agreement A is little more than a regular annual terms agreement, with a degree of planning with regard to new line listings and promotions. The advantage of this type of agreement is that it does not involve any additional resource, either financial or human, and therefore the level of risk is minimal. The relationship and negotiation is usually transactional, and requires little collaboration. The potential incremental value that will be created by this type of agreement is limited.


Agreement B covers category plans and co-marketing, which may involve joint TV advertising. It requires the engagement of more functions and is more complex in scope. It involves more investment in resources for both parties, and therefore it carries a higher degree of risk. This type of joint business planning requires a higher degree of collaboration, commitment and trust by both parties. The potential incremental value that can be created is higher.


Agreement C is a deep level JBP. This involves the broadest range of activities and people. It requires a high level of trust and collaboration, and the highest level of negotiation capability as it is likely to involve highly complex, wide ranging discussions. It’s very resource hungry and carries the highest degree of risk. However, correspondingly, it also delivers the maximum potential commercial and strategic benefits.


As Figure 2 illustrates, in my experience the majority of JBPs fall into category B. It is important to point out that none of these types of JBPs are intrinsically better or worse. Each company should evaluate their business model, objectives and available resources to decide what type of JBP is most appropriate to undertake with another party.


Figure 2: Distribution of JBPs by type



The JBP process


Joint business planning should be a continuous flow of activities. Too often the JBP is an agreement, which, once completed, is put away until the end of year 2. That’s when problems occur. During the year the economic and trading environment will change, there will be curve balls coming your way which you hadn’t expected, and the plan needs to be revised and adjusted throughout its life; otherwise the discrepancies at the end lead to conflict and breakdown in trust. Scepticism sets in, and the quality and potential benefits of joint business planning are eroded over time.


Another critical point to make is that you should be in charge of the process: if you lead it, you’ll be in a stronger position to influence the outcome.


Having a roadmap will enable you to drive the process.


Figure 3 below illustrates the main steps of the classic JBP process. Please note that the time lines assume FY starting in January.
Figure 3: The JBP Process


Phase 1: Situation assessment


The first thing to say is that Joint Business Planning is not for everyone, and, as outlined above, there is a range of JBPs which can be entered into, involving different levels of resources, risks and benefits. Right at the outset you should decide, internally with your team, your objectives and what type of agreement is most appropriate for your business. Your customers or suppliers can be segmented to make strategic decisions to help decide resource and time allocation.


  • Potential benefits. First of all consider why having a JBP is important to your business. What is the size of the prize? This is about estimating tangible values like Volume, Turnover and Margin, as well as intangible benefits. Some of the intangible advantages to consider include:


  • Strategic influence. Through a closer relationship with the other party, you should have more face to face time with them, across different levels and functions. This will enable you to have more influence over their wider strategy and secure more of their resources – be it time, investment, etc.
  • A company may decide to enter into a more intimate collaboration with another in view of the knowledge and insights it will gain which will benefit the rest of its business.
  • The ability to better plan, allocate resources and reduce risk because you have a clearer picture of next year.
  • Stability and security. Especially useful when trying to secure additional finance or investment.


Not all of these are guaranteed, so, at the outset of the process you need to make an assessment of which of these benefits you would actually be able to gain from a JBP process.


  • Resources required. What level of resources are available to you? This consideration is especially relevant for suppliers, as they are the party which brings much of the analytical and management work to the table. The resources required will vary according to how broad the plan will be, however they could involve such capabilities as:


  • Financial data, e.g. Value Chain Analysis, or Open Book costing
  • People placement, e.g. category analyst “on loan” to retailer
  • Analytical resource, e.g. category data and shopper insights
  • Space Planning resource
  • Marketing resource
  • Project Management resource
  • Logistical resource, e.g. to explore economies and reduction in food miles
  • Merchandising resource
  • Financial investment – for suppliers, a closer business relationship means a closer category partnership, and with that may come higher investments, for example for such projects as shopper research, and sometimes higher capital expenditure, for example in new fixtures and fittings. Retailers, on the other hand, need to be more flexible with a supplier partnered for Joint Business Planning for such things as listing fees.


Many of these resources for the supplier will be customer-specific, and even when they are not, they will absorb capacity from corporate resources which could be invested with other customers. It’s essential that a proper assessment of these requirements is made at the outset, to avoid potential friction/renegotiation with the other party during the year.



1.3.     Partner assessment


Having carried out a cost/benefit analysis focussed inwardly into your business, your attention must now be turned to the other party to fully assess the element of risk involved and decide whether you do indeed wish to enter into a JBP agreement with them, and what type of JBP would be appropriate. These are the most important factors which should considered to build a profile of your potential JBP partner.


Table 1 below is an example of a scorecard which you might use to assess the suitability of different partners.


JBP Indicator



Importance rating           (out of 100) Their Performance (out of 10) Weighted score
1 Day to day communication 80 7 5.6
2 Logistical effectiveness 90 8 7.2
3 Ease of doing business 100 8 8
4 Size of the business 90 6 5.4
5 Strategic Fit 80 5 4
6 Quality of Relationship 90 8 7.2
7 Commercial responsiveness 90 7 6.3
8 Level of trust/collaboration 80 8 6.4
9 Category Dev capability 70 9 6.3
10 Marketing 60 6 3.6

Table 1: Partner assessment table


The diagram in Figure 4 shows how a potential JBP partner’s profile might look like. (Please note that the numbers are shown for illustration only).


Figure 4: Partner assessment profile


Phase 2: Objective Definition


This second phase is about defining the type of JBP with the other party. You need to align your objectives with theirs. The initial alignment usually takes place at senior level. The strategic intent to collaborate and form the JBP then flows down to the buyer and account manager, who will further define the specific topics to include within the agreement, what variables will be within scope and what out of scope, and therefore what functions will need to be involved and who within each function will need to be involved.


Top tips:


  1. Lead the process as much as you can
  2. Send agenda prior to each meeting, and summary after each the meeting


Phase 3: Information sharing


This stage is absolutely critical. This phase must include all the key stakeholders defined in phase 1, including Senior Management. It is essential to gain the endorsement and where necessary sponsorship of the senior management of both companies from the start of the process. This may take one or several meetings. It’s about a mutual exchange of priorities, strategies and tactics for the following year, discussion of big issues facing the business, coming out with some big ideas for generating growth in the coming year. You will need to agree a time-table and may have to sketch out a project plan depending on the complexity of the JBP.


Top tips:


  1. Be as open and upfront about your needs and aspirations
  2. Take the opportunity to position, pre-condition and manage their expectations
  3. Allow ample time
  4. Use a neutral venue and include a social element to encourage collaboration and build trust (this depends on the breadth and depth of the JBP).


Phase 4: Negotiation


In reality the previous phases are all part of the negotiation process, but in this phase the two parties, after listening to each other and prepared their positions, come together and make proposals and counter proposals to each other to agree the JBP. This phase will take several meetings.


Top tips:


  1. Agree roles within your team
  2. Agree a time table with the other party
  3. Agree what is going to happen if you haven’t reached an agreement within the time table
  4. Make proposals rather than asking them to make proposals to you
  5. Challenge their proposals by asking questions – don’t criticise
  6. Don’t open too extreme; remember this is a collaborative environment
  7. Nothing is agreed until everything is agreed (you may need to spell this out at the outset)


Phase 5: Post Negotiation


As soon as the agreement is reached, you should send a written summary of the agreement and you should agree with your counterpart the KPIs, producing a scorecard. A review schedule should be produced, that is, you should agree how often you are going to review actual performance against forecast. Consider reviewing the scorecard together every 4 to 8 weeks as appropriate. Teams may need to be decided and Gantt charts produced for specific projects. It’s important to keep the momentum going.


Remember that a JBP is not the same as a Supply Agreement. It is a merely a jointly developed plan of your aspirations for the following year. It is not a contract that can be relied on in court by either party. So Vendor Inventory, any marketing money etc that you want to be able to hold the other party to, must be documented separately and confirmed in writing.


Top tips:


  1. Consider the risks involved during the life of the JBP and what you can do now to reduce these risks.
  2. Try to stage agreements throughout the year rather than leaving everything to the end of the year.
  3. Include penalties for lack of performance, and incentives for exceeding targets.


Phase 6: Review and Amend


This is the biggest phase, because it takes place continuously throughout the year. This is the execution of the plan. The JBP needs to be reviewed every 4 to 8 weeks (review dates will have been decided in Phase 4). This includes looking at the scorecard and discussing progress of any project under way. Any discrepancy must be addressed immediately. New aspirations may arise and circumstances may also present themselves which need to be incorporated in the plan, for example new lines, or unexpected price changes which would affect profitability.


Top tips:


  1. Expect the environment to change, so the JBP will have to be adjusted accordingly
  2. Be prepared to re-negotiate the JBP as circumstances have changed
  3. Confirm in writing any verbal agreements / amendments in writing within 24 hours




What can go wrong with JBPs


Many things that can “go wrong” during the year can be prevented by applying the process outlined thus far. Let’s look at some of the most common dilemmas brought up by our clients:



Problem: You are a buyer and have been negotiating a JBP with one of your major suppliers since December last year. It is now June and you’re still trying to come to an agreement!


Preventative action:


  • Agree a time table at the outset, with a clear deadline.
  • Agree what is going to happen if the deadline is not met, for example escalation.




  • Stop negotiating and return to the previous steps – either the Objective Definition or Information Sharing phases to unblock the bottlenecks.
  • Give yourselves four weeks to come to an agreement.
  • Alternatively, you may have to abandon the process. Spending potentially the whole year negotiating the JBP will undermine its integrity and value.




Problem: You work for a major bakery supplier and last year developed a JBP with one of your biggest customers. One of your competitors, who lost a major contract with one of their other customers, has presented your buyer with a too-good-to-turn-down trading package which she has asked you to match.


Preventative action: A JBP is not an insurance policy against competitive actions. Curve balls such as this one can and will happen any time, whatever your size. Keep gathering intelligence from the marketplace. Information is Power. If one of your competitors loses a major contract, you know they will be looking around the market to replace that business with aggressive proposals.

  • Before the buyer comes to you, start planning contingencies
  • This can include either a pre-emptive strike in the form of some new proposals with your team, or defensive action.
  • Keep close to your customer and keep building value continuously throughout the year (via new initiatives, promotions, category activity, NPD etc). This will help to build barriers to entry to any competitors.



  • Put yourself in the Buyer’s shoes: they may not be happy about this situation either, but they cannot afford to ignore a strong trading package (especially if their category is behind its performance targets).
  • Seek to understand the buyer’s needs and identify their breakpoints by asking questions.
  • Make new proposals.
  • Point out that any loss of business will affect the whole plan, as every element of it is interlinked.
  • Point out the consequences of a collapse of the JBP, for this year and for the future of your relationship.
  • As a last resort, escalate discussions. If this is the case, engage your director(s) and align yourselves on an agreed strategy.




Problem: You work for a supplier of Health & Beauty products and your company owns some of the leading brands in the Haircare category. You have a JBP in place with your customer. It is now the end of the year. Your customer has reduced the retail prices of some your biggest brands during the year, as a result of which there is now a big gap in the profit plan. The buyer is asking you to fund this gap.


Preventative action:

  • Once again, this is unlikely to come as a surprise. During the year, you know if the buyer is going to be under pressure from its competitors on specific lines. Be proactive. Tackle the issue head-on before it becomes a problem.
  • If the buyer is considering reducing prices to react to its competitors, propose alternative solutions, like different size packs or augmenting the promotional plan. You’re in this together. Their problems are your problems.
  • If the buyer has no option but reduce the prices in store, return to the JBP and make any amendments to the plan (ie reduce the profit target accordingly)
  • As soon as the retail prices are changed in store, point out to the buyer the impact that these changes will have on the JBP.
  • Write to the buyer, copying the other main stakeholders, clearly stating that as your company is not the main instigator of the retail changes, you will not take any responsibility for the gap created in the JBP. Remind them of the alternative solutions which you have proposed.




§  Refer to the discussions you have had during the year and any written correspondence where you stated you would not be responsible for shortfalls in the profit number arisen from unilateral reductions in retail prices.

§  Refer to GSCOP – retailers are allowed to Request, not Require/demand

§  Refer to GSCOP – retailers can neither Request or Require any funding retrospectively

§  As a last resort, escalate discussions. If this is the case, engage your director(s) and align yourselves on an agreed strategy.




To conclude, no partnership is the same, and neither is every JBP. Decide what is the most appropriate type of collaboration for your business, then lead the process. Many of the problems which occur with JBPs can be prevented by treating the JBP as a living, working roadmap which needs to be constantly revisited and amended – not something you do once and return to at the end of the year.


It is difficult to imagine partnerships between suppliers and retailers without joint business planning. For all its challenges,