Member Article

Spot the baddie: respecting your supply chain and suppliers

As any avid Hollywood blockbuster viewer will know, British actors make for great villains.

Is it the accent or something in our national psyche that makes screenwriters and casting directors plump for a Brit when choosing a baddie?

And if it’s the latter, does the flawed moral compass extend beyond the fiction of the movie world, not only to individuals’ behaviour but also to our businesses’ practices?

A silly question, you’ll probably agree. But with some notable British businesses recently named and shamed for poor practice when it comes to dealing with suppliers, you could be forgiven for thinking of the companies in question, and their behaviour, as villainous.

A few months back I wrote a Bdaily column about the importance of treating your suppliers as you’d like to be treated yourself. Good practice in procurement certainly isn’t about beating down your suppliers to get the most out of them. But that was why Tesco recently made the headlines when the Grocery Code Adjudicator’s investigation found that the company had taken “unreasonable” amounts of time to pay suppliers. They received plenty of opprobrium from many commentators who were ready to cast them in the villain role.

Dave Lewis, Tesco Plc’s chief executive, has indeed held his hand up, saying that they had been “unsustainable” and “harmful” to suppliers; and Tesco has accepted the findings of the GCA. Lewis added that the company has undertaken a review of its practices and has made changes, including the introduction of 14 day payment terms for UK SMEs in their supply chain.

I hope these changes make an immediate difference.

The villain in this film isn’t only played by British businesses though – others are also being named and shamed for treating suppliers badly. American consumer giant Heinz has more than doubled the time it takes to settle supplier invoices, imposing a 97-day wait on suppliers, up from 45 days.

But for all our indignation, it’s also worth remembering that whilst paying your suppliers on time is, of course, important, it’s not the only factor involved in treating them well and having a healthy supply chain.

And late payment issues can also be caused by problems at the supplier. Supplier relationships can be complicated, so effective communication alongside efficient processes is vital.

For procurement to be effective, it needs to be progressive and smart and it needs to be understood across the entire business. Then you really can work with your suppliers and achieve sustainable gains in efficiency and risk mitigation, for their businesses and your own.

Unscrupulously exploiting your supply chain is not the same as optimising your supply chain. Smart procurement will manage risk, deliver savings and enable ongoing efficiency – not a baddie in sight!

This was posted in Bdaily's Members' News section by Steve Malone .