Are we bulldozing suppliers into bad behaviour?
Have you noticed what sort of people we turn into when trying to get a seat on a low-cost airline?
As soon as the tannoy announcement squeaks into life we’re all on our feet and pushing forward. No one cares about the priority boarders and young children who have to fight their way to the front. We seem to care only about ourselves. Eyes are cast firmly towards our feet as we push ahead to ensure we get a choice of seat. Not a great advertisement for humanity. And I won’t even start on how people behave when trying to put bags into overhead lockers once on board.
Our desire for low-cost flights has also driven the suppliers to behave rather poorly. I appreciate that charging for extras enables us to choose whether to receive the service or not. But charging for “must haves” (a seat or making a payment), and increasing the likelihood of us having to pay the additional admin fees for airport handling through unhelpful communications, are simply ways of increasing revenue for the airlines and getting the price back up.
I wonder, as buyers, how many of us are really driving our suppliers to do the same to our organisations? Have we avoided eye contact as we bulldoze the suppliers to reduce their costs further?
As a local managing director of a SME said to me recently: “That last 10 per cent cost reduction has just cost them all our good will. They will pay for everything extra and I can assure you that will cost them more than 10 per cent.”
What price is your company paying in its search for lowest cost?
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I’m not sure everyone on the cheap airline behaves as you describe. Would you rather that public sector buyers, say, go easy on suppliers and you pay a couple of pence extra on your taxes?
There appears to be a general impression that suppliers should continue to reduce prices without reducing cost, why should they? We want suppliers to invest in new equipment and process improvementsnts, for this they need to make a margin. Some companies forget suppliers are key stakeholders in their route to market, would they treat their customers in a such a cavalier way, i think not. I agree with the MD of the SME, you reap what you sow!! Supplier relationship is about working with the supplier so you both win, not continuing to kick them when times are tough!!
As someone who has worked in both sectors during the downturn and had to request price freezes and reductions in both public and private sectors, I can state it’s not necessarily behaviour buyers willingly display. Very often we are instructed by the powers that be to make direct cost reduction requests.
However, it’s not a negotiation if there is nothing to give in return, so we also need to focus on what we can do to help the supplier – shorter payment terms, longer contracts, single delivery points etc…but some of us have been doing that as a matter of course for years!
Appoint your suppliers after a competitive tender, get the contact in place etc. Then treat them fairly! Pay on time, every time, don’t seek ways to delay payment for trivial reasons, treat them like you would wish to be treated, be open and honest with them. Being “fair” should not cost money, but it will get back more than you give. Trust will reduce admin costs and speed development. When times are tough and you want the suppliers to go the extra mile for you, why should they do so if they have been treated badly?
we shouldn’t forget that all suppliers are not equal.Some are necessity for your business and others are not.The change of behavior is but natural and bound to exist based on the supplier spectrum and range of relationships which a company wants to maintain.Don’t consider it as a bias but it comes natural.Suppliers should be aware of these business behaviors and reasoning behind it to in order to develop and compete for changing brand positioning in customer’s mind.I see some positive elements for being different with different suppliers.