Restoring the balance of power between brands and their suppliers

04 Apr 2023
Lisa Domoney Avatar
Lisa Domoney
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Recently, I've been thinking about the current economic crisis and the numerous brands and retailers that are closing down due to outdated business models. Businesses that have not evolved their models or pivoted during the pandemic are suffering, and many are being forced to close their doors.

Three recent events have stood out to me:

  1. I read an article about one of the big five supermarkets being sued by a supplier for not taking positive action against modern slavery practices in their supply chain. The article also revealed that the retailer was forcing their suppliers into administration through unrealistic demands for price reductions. Shortly after this, I read another article about a retailer demanding fee contributions from its suppliers or potentially facing consequences.
  2. I watched a program on Netflix called The Accident, where eight children were killed during a building collapse caused by substandard steel used by a company, forcing the supplier's hand on price.
  3. I participated in a training session where I learned about a retailer with a two-way code of conduct called Zeeman. This is the first time I've seen a retailer put as much emphasis and accountability on the brand demonstrating responsible procurement practices as on the supplier conforming to ethical and quality standards.
  4. I attended a demonstration from Supply Pilot who put supplier engagement and relationships at the centre of their purpose and business model.

What these events made clear to me is that suppliers potentially hold an incredible amount of power and intelligence. They can literally make or break a business. They have the most knowledge and expertise. So why aren't they treated with respect by brands and retailers? Why wouldn't you partner with suppliers to achieve a common goal?

During my many (more than I wish to mention) years working in responsible sourcing for retailers, I had the same conversations over and over again. Perhaps because of my experience working in a factory as a youngster and understanding the people, processes, and challenges first-hand, I was more empathetic than most retailers towards suppliers. I spent a lot of time running purchasing practices training for buyers, bringing to life case studies that demonstrated the impact of daily decisions on the supply chain and the direct link between quality issues, ethical issues, and the critical path. But it often felt like I was banging my head against a brick wall when talking with buying/sourcing teams. "Yes, but what about the impact on the supplier?" I would ask. “How much easier would it be if we engaged suppliers in the decision-making process?”

In every corporate I worked for, we always talked about engaging colleagues and other divisions in the business, bringing them along on the journey with us. However, this did not seem to apply to suppliers.

We need to give suppliers back their voice. We need to share the chalkboard when drawing out solutions to common issues. I can still remember standing up at a supplier conference at Sainsbury's years ago and talking about partnership, trust, and collaboration. In my humble opinion, that message still stands: it is mutual. Not all humans are created equal, and similarly, not all suppliers are created equal. It's called inclusivity. How can we meet each supplier where they are on their journey to support capability and positive change? Creating positive change together with suppliers translates into a beyond-compliance approach, and therefore emerging legislation does not suddenly put pressure on all parties.

So, how can we effectively engage suppliers in the decision-making process?

These are a few of my reflections over the years, I sincerely hope one small nugget might help at least one organisation along the way.

Here are a few suggestions:

Identify the suppliers who are most affected by the decisions and who can provide the most valuable input. These suppliers may have expertise or experience that can inform the decision-making process. Having an advisory board with suppliers on it can only be a win-win.

Encourage an open and honest dialogue. Seek and provide feedback to the suppliers to help both sides understand expectations and make improvements where necessary. Encourage your suppliers to share their thoughts and ideas, and provide them with a platform and a safe space to do so without fear of retribution.

Build long-term relationships. Focus on building a long-term relationship with your suppliers, rather than just looking for short-term gains. This will create a sense of trust and collaboration that will help you work together towards common goals.

Understand supplier capabilities. Take the time to understand your supplier's capabilities, strengths, and weaknesses. This will help you identify areas where they can add value and where you can work together. Seek to understand the limitations of capacity when placing repeat orders.

Invest in training and development. Invest in programs for your suppliers to fully understand your internal processes, but also invest in training buying/souring teams on how a supply chain really works.

Collaborate on innovation. Work together with your suppliers to identify opportunities for innovation and collaboration. This can help you both create new products and services that can drive growth for your businesses.

By implementing these suggestions, we can create a more inclusive approach that meets each supplier where they are on their own journey that aligns with business strategy and goals.

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