Make Love, Not War

May 1998

Managing:Suppliers

Make Love, Not War

The advantages of good supplier relationships

All retailers want to win their customers' trust, but cultivating their suppliers' good will can be just as important. Retailer-manufacturer relationships based on trust rather than intimidation bring big rewards, according to an article in the Harvard Business Review.Among them: suppliers who share information with you, take time to learn about your business and go the extra mile for you when you're in a pinch.

The article spotlights British retailer Marks & Spencer as a champ at building good relationships with its suppliers. (The store is just as good at cultivating consumers' trust. See "In Marks & Spencer We Trust," Professional Jeweler,April 1998, p. 94). Thanks to this skill, the store has almost no supplier turnover. Some manufacturers have been selling Marks & Spencer for more than a century.

Two-way communication is one secret to the retailer's strong marriages with vendors, the article says. Marks & Spencer's CEO meets regularly with suppliers to hear their opinions and suggestions. Regular suppliers are even granted a keycard so they can enter the Marks & Spencer's head offices at any time to discuss problems.

The retailer also tries to ensure all suppliers get a fair share of the business, and that when it wants to decrease orders from a supplier, it does so gradually, over a few years. Marks & Spencer suppliers have the ability to appeal buyer decisions to higher executives, the article says. They also get full explanations of the store's policies and actions and are invited to visit stores to see how their products are displayed and sold.

When Marks & Spencer signs up a new supplier, meetings are set up between its own buyers and merchandisers and the supplier's employees; the retailer also visits the supplier's factory several times.

Moving from an adversarial relationship with suppliers to one based on trust often calls for wrenching changes in retailers' attitudes and organization, the article says. Many parameters for measuring employee performance have to change. In addition, retail buyers need to be replaced by "relationship managers with appropriate bedside manners."

 Suppliers Try Too

Does good service make a difference? Andrew Ban of Leslie's, a chain importer headquartered in Greenwich, CT, thinks so.

"In the 1990s, service is becoming more important," he says. Leslie's, for example, offers customers an unconditional guarantee: if a chain ever breaks, return it for a new one. "We've always done this," Ban says. "But only in the past few years did we start to advertise it. This differentiated us from other [chain companies]. Quality differences are slight, so the only place we can make a difference is in service."

One of the biggest complaints by retailers involves the return policies of manufacturers, or lack of them. "If something breaks, it's like pulling teeth to get them to do anything about it," says one retailer.

"They want to sell to you, but when it comes time to support you, a lot of them don't do it willingly," says another. Asked if retailers abuse Leslie's return policy, Ban says a few do. "But most like to know it's there if they need it."

by Jack Heeger






Copyright © 1998 by Bond Communications.


 

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