This week I attended – and spoke at – Sainsbury’s fourth annual supplier conference and awards.
Alongside a host of speakers from the supermarket who addressed strategic suppliers on subjects from sustainability to logistics, online developments to customer insights, the opening presentation was given by a board director – this year, chief financial officer John Rogers.
As I said to the gathered group, strategic relationship management (SRM) doesn’t work without the support of those at the top. (more…)
You don’t have to look far to see the reputational damage caused by poor supplier decisions.
According to recent figures by the consumer-insight network Kantar, nearly half of us changed our shopping habits following the horse meat scandal. Following this, Tesco chief executive Philip Clarke pledged to increase orders of UK-sourced meat from 20 per cent to 90 per cent and ordered a review of how the company’s relationships with suppliers could be made more “transparent and collaborative”. (more…)
It never fails to amaze me in business the number of people and organisations that accept the initial offer a vendor has put forward to them. Are people scared of negotiating? Is it seen as a faux pas or a dirty habit? Don’t get me wrong I am not saying you should act like you are negotiating on a rug in an Istanbul market but you should at least open up a discussion. (more…)
Food supply chains have become too long and complex, crossing many borders and involving many different organisations. This has led to increased risk, as highlighted in the recent meat scandals.
As global trade continues to grow, it is unlikely our food chains will revert back to become entirely locally sourced. But it is clear from recent events that things need to change and supply chains need to be better managed. (more…)
We might expect businesses to take every opportunity to deliver stretching and sustainable cost reduction, never more so than in times of austerity.
Purchasing managers I have met tell a different story. Most have cost reduction objectives and many receive bonuses based on it. The target set is often 5 per cent, which is hardly stretching, on the basis, presumably, that 10 per cent seems too much and 0 per cent is not a reduction.
Salespeople have also asked me: “What is this ‘buyer’s 5 per cent’ we are asked for?” Sellers often respond by adding 10 per cent to their price so that they can take 5 per cent off: the target is achieved, everyone gets a bonus and the price goes up. (more…)
How do buyers and suppliers ensure the same direction, or ‘goal congruence’, which seems to be the expression of the day, in tendering for contracts?
A UK Audit Commission report a decade ago cited six key reasons for ineffective procurement: (more…)
From my recent conversations with procurement and supply chain professionals, it appears the skills needed for success are changing – and so is the image of the profession.
Historically procurement has been seen as a cost saving function, obsessed not with what is best for the business but what is best for the bottom line. But the realisation of the benefits of effective supplier relationship management and the subsequent pay offs means the focus now relies much more on mutual success, not financial rationalisation. (more…)
The relationship between train operators and SMEs seems set for change. Along with the Department of Transport’s major re-franchising programme, presently under way for the UK’s railway networks, comes a significant shift in the government’s view on the length of time over which the new franchises will run – extending terms that were commonly six or seven years to about 15 years for the new franchisees. (more…)
I recently picked up and reviewed, for a second time, a survey of companies operating in Western Europe, carried out by Capgemini and the Economist Intelligence Unit. In it, 86 per cent of respondents agreed that “business transformation has become a central way of working”. However, the percentage who believed business transformation was something their company excels at was only 30 per cent. That research was carried out in 2007 and I was left wondering whether things had improved. I suspect not. (more…)
The G4S Olympic contract debacle certainly brought supplier relationship management (SRM) back into the spotlight during this year’s silly season.
It seems to me there was a failure to comprehensively (and repeatedly) assess the contractor’s capacity and capability to deliver what was (re-negotiated) in the contract. Perhaps there was a mindset that presumed a contract provides assurance of success. (more…)