30 Mar 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.