Enough hammering

9 November 2010
When will they ever learn, oh when will they ever learn?” wrote Pete Seeger in 1961. That’s a long time ago and yet it seems we have buyers who still take the sledgehammer approach to relationships with suppliers, when they want those self-same people to help them in a spirit of goodwill in times of need. These ‘macho buyers’ have one weapon in their armoury, namely the fist they use to bang the table. I hear in some organisations, sturdier tables are being bought because the existing ones are not fit for purpose due to excessive use. For empirical evidence I would cite news that Serco had instructed suppliers on a government contract to provide a credit note for 2.5 per cent of the whole of their 2010 spend. Since then, of course, Serco has retreated and cancelled the initiative in the face of public criticism and a significant drop in its share price. The initial article (Sunday Telegraph, 31 October) reflects how suppliers felt the approach was unreasonable, but it also quotes Serco as saying: “We highly value the close working relations with our supply chain partners and are committed to supporting a strong supplier base and in particular SMEs.” Serco is not alone in this sort of behaviour, in other cases we have heard of purchasing organisations tearing up contracts they made a few months ago because that deal did not suit them and others requesting cash contributions from their “supply partners” for the ‘right to supply’. This adversarial behaviour will breed resentment and protectionism in the supply base of the organisations concerned. For example, an accountant working with a sales team can devise a cost structure where the same overhead can be apportioned three times to different cost elements. Most buyers, and particularly the macho type, won’t spot this and the supplying organisation will recover some of what they have lost elsewhere. This is anything but good supply chain practice and is redolent of obsolete 1960s relationships in purchasing driven by the buyers of that time. I suggest that, if approached respectfully and proactively, people working for suppliers will respond to their customers’ business situations with ideas of cost reduction and/or the provision of more for the same cost. This is not a soft approach; I feel it takes more guts to enter into an open discussion than to bang the table. So why not open up to people from suppliers and share information about our cost structure with them, asking for input and ideas on savings and improved value. We can then work through costs and benefits for both organisations and also fight the common enemy together – waste. Working against inefficiency will deliver more than banging the table, which fosters resentment as demonstrated in the Serco example. Serco has bowed in this case, but are others capable of learning the same lesson? Let us hope so and then they can use the sturdy tables not for banging, but to pile the benefits on. * Mike Fogg is a consultant at 
PMMS Consulting Group
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