Question

You are a sales manager for a regional electrical distributor. You just learned that one of your smaller, nonstrategic suppliers of copper wire has directly emailed your salespeople (without your knowledge) with details of an incentive plan that would provide your salespeople with bonuses, paid directly by the supplier, if they met certain sales requirements of their product over the next quarter.

• Is the supplier using a push or pull strategy?
• As the manager of the distributor, what actions would you take, if any, in response once you found out about this program? Explain your actions.

Answer 1

The supplier is using a Pull Strategy here. The intent is to push the material with a strategy that cannot be considered legal.

As supplier is dealing with an organization and not individual the communication should have been through proper channel. Rather suppliers should have sent the communication to concerned Manager and the decision would have been taken whether to go ahead with the incentive plan. Such a proposal could have a decremental effect on the distributor profitability as that could have involved pushing an item at the cost of others.

If Salesperson himself brings this to Managers notice. No action should be initiated against the Sales Person and this issue should be dealt with the supplier.

If Sales Person does not bring this to your notice and you come to know through someone else, means Salesperson had the intent to go ahead with the offer.  This can be considered a case of quid pro quo and should be dealt with as a compliance issue. An appropriate team needs to be constituted as per company policy to investigate this and disciplinary action should be taken against Sales Person.