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When Should A Business And A Vendor Break Up?

The recent end of the partnership between Sears and Whirlpool illustrates that no business relationship lasts forever. For many businesses, the real challenge is determining when to bring a vendor partnership to a close. That question is complex, but looking at the end of the relationship between retailer Sears and appliance manufacturer Whirlpool can offer some lessons on timing.

Growing Apart Happens

While the surface explanation for the breakup was a pricing dispute, closer investigation reveals there was likely much more involved in the decision.

The Sears/Whirlpool relationship began more than a century ago. According to an article from Associations Now, the relationship made sense back then. Both businesses benefited. Now though, Whirlpool has grown to the extent that Sears only represents a small percentage of overall sales. 

External Forces Can Damage A Relationship

Sears is not the retail giant it once was. Against strong competition, it has not seen a profit for years. Meanwhile, Whirlpool has had to increase prices due to the rising cost of the raw materials needed to make the appliances. These external forces may have helped to put the two businesses at odds in terms of pricing.

Breakups Do Not Have To Mean Never Seeing Each Other Again

What is interesting is that the breakup is not as complete as it may seem on the surface. Whirlpool will continue to manufacture Kenmore brand appliances for Sears, as it has for years. Sometimes, aspects of a vendor relationship are worth salvaging. This is not  always an all-or-nothing proposition.

A Cost/Benefit Analysis

In all things business, including vendor relationships, it is worth looking at the costs and benefits before making a decision. Is the relationship costing more than it is worth? Or is it still proving beneficial? Is there a way to alter the relationship so that it can be mutually beneficial, rather than ending it altogether? Care must be taken for both the business and vendor to weigh all options before bringing a relationship to a close.

 

 

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