Delivering the goods?
Here we go again: industry spokesperson defends the ‘little guy’ from the brutality of the all-powerful supermarket giants.
Last week in SM there was the news of Waitrose imposing late delivery charges on suppliers for shipments not arriving to schedule.
The Forum of Private Business’ (FPB) senior policy advisor Phil McCabe complains this is unfair to members of his association. According to McCabe, Waitrose should be “building relations with suppliers through dialogue and more understanding” rather than imposing the late delivery fines – as if these two concepts were mutually exclusive.
McCabe and other representatives like him would be better advised to acknowledge late deliveries are a serious problem for the customer and that – providing they are not caused by such customers ‘short-calling’ suppliers (ordering inside agreed lead times) – this is a supply-side problem. From the customer perspective, this is no less than value leakage. Suppliers need to up their game and stop overpromising and under-delivering.
Of course, large supermarkets wield great power over certain sections of their supply chains and have been shown not to be slow in using that power, but suppliers are naive to think such customers will tolerate repeated lateness.
Several years ago, I was working with a large buying organisation that was forever frustrated that certain suppliers were bold enough to make a calculation they would accept customer abuse as a price for being able to plan their production activities with the stability of having a buffer of unfulfilled customer orders. They and the customer termed these ‘arrears’ and they had been part of the landscape for years. It wasn’t until the buying organisation homed-in on these arrears, either re-scheduling its demand or working with the supplier to ensure clearance, that the suppliers began a long and tortuous journey to excellence in delivery performance. The result was on time/in-full (OTIF) delivery and improved supplier relationships with those suppliers that embraced the challenge.
The point? Customers get the suppliers they deserve and most often this means buying organisations having to demand higher standards of supplier performance, while improving their own supplier management practices. For the suppliers and McCabes of this world, it’s about stopping complaining about powerful customers and instead delivering on their promises.
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Whilst I acknowledge most of what you are saying David , do not forget that sometimes margin is a motivator for supplier performance , supermarkets squeeze the little guy so much in the end it should be business the smaller companies should reject so as not to have supply issues through low motivation. This will probably occur once the supermarkets impose fines , thus creating another supply issue altogether. Dialogue does not work , supermarkets weild the power and discussion is negligable , you either do it their way or not.
I think you touch on an important point David, when you mention the buying organisation’s own operational-level behaviour. My experience suggests that it’s not all one-sided.