It’s all about Suppliers!

Ok, I’m being a little flippant - obviously it isn’t all about suppliers, but where would any business be without its suppliers?

In the world of Retail, no suppliers = no products = no sales.

So we all have to be involved to some degree in Supplier Performance Management, focusing on the absolutes such as on-time delivery and in-store delivery, which are obviously paramount. But what about innovation, service, support, quality and sustainability?

So much depends on Suppliers. 

Take the example of Sustainability. At a recent conference several multi-national Brands confirmed that around 70% of their environmental impact is in their supply chain (ingredients, packaging etc.), and less than 30% is in manufacture and distribution.

A survey last year confirmed that “saving money is number one reason for businesses to go green...” And if 70% of these potential savings are in the supply chain, collaboration and supplier engagement are essential to unlocking this value.

Unfortunately, we still too often see a culture of competition rather than collaboration and relationships have traditionally been transactional; a Supplier ‘sells’ and Retailer ‘buys’, rather than a ‘better together’ approach.

Consider another area: Quality. 

In Retail, a traditional approach to product complaints has simply been a means to recover costs and a proverbial ‘stick’ with which to beat the suppliers.  As a result, all too often the focus is on incident/issue management rather than proper root cause analysis.  We advocate transparency as a pillar of Supplier Engagement and sharing consumer feedback – not just major incidents – allows Suppliers to focus on root cause analysis; focus on prevention rather than cure.

The ‘cost of quality’ is not recharges, refunds and RTMs, or the cost of creating a quality product; the cost of quality is the cost of NOT creating a quality product.

To unlock this value requires Supplier Engagement. 

A motivation and understanding for the importance of quality.  Transparency about the issues and feedback; the information with which to act.  And understanding the benefit to them; the potential to reduce costs and increase sales.

This is especially true for Private Brand retailers where suppliers are essentially an extension of your organisation; they are your manufacturing department, your quality control department and can be the back-bone of your product support process.

Okay, so to return to the start… it may not be “all about Suppliers”, but it is impossible without Suppliers.

Tags: Supplier engagement

James Butcher

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