Are mediators needed?

1 February 2007

01 February 2007 | Paul Snell

Almost two-thirds of buyers believe outside intervention is necessary in the relationship between buyers and suppliers, according to the latest SM poll.

The survey of 100 buyers identified two areas where purchasers felt some form of third party involvement might be needed: to step in where buyers hold too much power in a market, and as a mediator when relationships turn sour.

"There are cases where market forces cannot be left to apply, such as where a newly competitive market has been created and requires regulation," said consultant Andy Davies.

One buyer, who didn't want to be named, added: "There is a need to prevent 'bullying'. Some supply markets do enable one party to wield unfair muscle, and such circumstances need regulation."

Other buyers proposed the idea of using an "independent referee", who could regulate and resolve disputes. "There will often be a need for an outside mediator to act as an independent voice where there are disputes that cannot be solved between the two parties," said another respondent. He claimed this would remove the "emotional attachment" that sometimes occurs between buyers and suppliers.

Yet some felt current regulation was adequate. "Leave market forces alone - tinker with them at our peril," said Gary Moore, strategic procurement manager at Bournemouth Borough Council. "Who wants a Soviet-style managed economy?" "Suggesting that an external body should monitor buyers leaves me with a feeling of 'Big Brother'," said Marc Frankl, senior procurement manager at hospitality procurement consultancy Makella. "Buyers do not set out to bully suppliers or put them out of business."

A report by the Competition Commission into the buying power wielded by big supermarkets (Web news, 16 May 2006) said a "climate of fear" prevented suppliers complaining about their clients. Yet last month the commission said evidence from suppliers about relations in the grocery sector did not indicate "widespread problems", but it admitted there were still concerns.

SMfeb2007

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