Is there nothing new? …the importance of supplier motivation and communication in retail

Is there nothing new? …the importance of supplier motivation and communication in retail

At the risk of sounding a little ecclesiastical, I recently found myself asking the age old question, “is there nothing new?”

I was reading about Sam Walton – founder of Walmart and Sam’s Club – and was pleasantly surprised to read that two of his few key rules for building a business were Motivation and Communication.  At S4RB we call it Supplier Engagement, or motivation and understanding, but the principles are the same.

Motivation

As my colleague David Taylor wrote in his recent post, motivation is about engaging with the ordinary people within your supplier base to do whatever it is that is important.  It doesn’t matter whether that’s responding to a simple query or developing a new product – motivation is about ensuring that your suppliers are as committed to your goals as you are.

At S4RB we are firm believers in the power of successful Supplier Engagement. It can deliver speed, accuracy and efficiency across myriad business areas, and especially within Private Label Retail where suppliers are such an essential part of not only the supply chain, but also product innovation, product development and quality assurance. Whether implementing a new system, embarking on a new business initiative, or simply performing a regular day-to-day task, motivated business partners play a key role in your success.  As Sam Walton put it: “Motivate your partners. Money and ownership alone aren’t enough. Think of new and more interesting ways to motivate and challenge your partners.”

Sam said this decades ago, after starting a single dime store, then went on to build the world’s largest retailer. His concept may not be new, but sadly many still ignore it, and retailer-supplier relationships often remain very cold and transactional – do this, by then (with a potential ‘or else’ attached).  Your success and your supplier’s success are so often intertwined that there needs to be a shared motivation to common goals.

Communication (or, Understanding)

Sam goes on to say: “Communicate everything you possibly can to your partners.  The more they know, the more they’ll understand. The more they understand, the more they’ll care. Information is power, and the gain you get from empowering your associates more than offsets the risk”.

I think the perceived ‘risk’ of being transparent with suppliers – of sharing information freely with them – remains an obstacle in many retailer-supplier relationships. But good Communication and understanding require transparency about goals, supplier performance and product performance. This is why we focus so much on visual management within the solutions from S4RB – on clear communication of goals, targets and performance. Suppliers need to know not only what needs to be achieved, but also the how and the why.

Motivation and understanding may not be new principles, and indeed they are increasingly well understood when it comes to employee engagement and performance management.  However, this remains an area of significant untapped potential in supplier relationships, where successful Supplier Engagement has the potential to reduce costs, improve quality and drive innovation.

In so many ways Sam Walton was ahead of his time in retail, and I’d personally argue this is reflected clearly in his ‘ten rules’ for success; rules which I think reflect the man and his affinity to real people.

Away from the ten rules, one of the Sam Walton quotes I liked most was when someone asked why, given his enormous success with Walmart, he still chose to drive a pickup truck (now in the Walmart museum in Bentonville). His answer, which I think is a measure of the man, was, “What am I supposed to haul my dogs around in, a Rolls-Royce?”

James Butcher
james.butcher@s4rb.com
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