Tread carefully

Stefan Stern
14 January 2014

16 January 2014 | Stefan Stern

Caveat emptor – let the buyer beware. There is nothing new in purchasers taking care – or being advised to take care – on the brink of a deal, as the Latin phrase indicates. But the economic turmoil of the past five years has thrown some traditional relationships up into the air. The story, as recession grew deeper, was all about the increased power of buyers and the nervousness of suppliers. Prices had to fall in a buyers’ market. But now, as something like recovery begins to emerge, purchasers are having to tread more carefully. Will suppliers cope with increased demand? Perhaps, the thinking goes, it makes sense for some purchasers to become ‘preferred customers’ instead: put yourself at the front of the queue before goods and services run out.

The dangers in such a relationship are obvious. You could pay too high a price to earn that status. You would be interfering with the operation of a free market which, some economists still believe, is the best way of establishing fair prices. Maybe you will get locked in to a deal with a supplier just as a better alternative provider emerges. You may be buying certainty, but at what potential cost?

This is another conundrum for purchasers to wrestle with. And it reminds this observer once again that the subtlety and skill required to make the buyer-supplier relationship work well are great indeed. Few people think economic recovery is going to be smooth or straightforward. But the emergence of ‘preferred customers’ is confirmation of just how hard it is going to be to navigate a safe path through the terrain ahead. Good luck, and let the buyers beware.

Another dimension

Please put those special glasses on. This column is brought to you in 3D. Gasp at the technology allowing this paragraph – yes, THIS ONE! – to leap off the page. Marvel at the 3D technology.

Sorry – school-boy humour. It can be hard for the middle-aged… ok, people like me… to grasp how much has been made possible by technological advances. We seem to be living in a science fiction movie. So many things that seemed futuristic (and impossible) 20 or 30 years ago are commonplace – touch screens, mobile video and voice recognition. Those of us who got used to dial-up internet and websites find data whooshing at us at ever greater speed.

And now there is ‘3D printing’ – making new products, which emerge from a machine that looks a bit like a big photocopier, almost from scratch. Does this mean supply chains can be abolished? Hardly. 3D printing will not, for the time being at least, remove the need to have larger manufacturing sites.

But the faster prototyping is going to speed up product cycles and the way suppliers deal with their purchasers. And it is no use crying ‘Stop the world, I want to get off!’ The future is arriving fast in glorious Technicolor and 3D. We have got to get used to it. Quickly.

☛ Stefan Stern is visiting professor of management practice at Cass Business School

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