How much should you trust your suppliers?

Gurjit Degun
13 March 2014

Gurjit Degun © Akin Falope13 March 2014 | Gurjit Degun

Trust and honesty is probably the biggest part of building relationships with suppliers and key to successful negotiation.

For example, at the CIPS Negotiation Challenge final last week, one of the judges Brian Davy, indirects purchasing director at Jaguar Land Rover, advised students to “let your personality come out and be trustworthy”. He said the winners were regarded as honest and trustworthy by other groups in the competition.

But trust is not always enough, as CIPS group CEO David Noble has said: “Trust and honest relationships are key in good supplier management, but trust alone is not enough.”

Research by supply chain risk firm Achilles has found that just half of UK manufacturing companies are auditing their suppliers for child workers, slaves and conflict minerals; and one in five said that they are confident in suppliers’ ethical compliance purely because of personal relationships.

SM webinar last week raised similar issues. Emily Pearce, stakeholder manager at Sedex, said research by PwC and MIT showed just a third of companies were “actively seeking transparency” beyond tier one suppliers, yet the “greatest and most critical risks are found lower down the supply chain”.

This could mean your supply chain is potentially involved in child or slave labour and conflict minerals, which could have a huge impact on your reputation - even leading to share price changes and people boycotting your goods.

According to Adrian Chamberlain, CEO at Achilles, there should be a collaborative effort by manufacturers to make sure they are asking the right questions all the way down the supply chain, to avoid a repeat of the horse meat scandal. But some also question whether buyers can trust that an audit process has been carried out effectively.

What action do you think buyers should take?

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