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Suppliers in the Chain
I’ve been looking at an old topic recently - EDI testing. For you who have followed ec-bp.com since its humble beginnings, no doubt you recall our opinions regarding testing and charges associated with them. The issue hasn’t changed much. It seems retailers still need to test the documents they are asking their suppliers to submit, and suppliers keep trying to lower their expenses by trying to avoid testing. At what point do these opposing interests amount to mutual abuse?
It’s an interesting question. One that both retailers and suppliers believe they are on the right side of. But in truth the issue is pretty clear. Both sides want smooth and consistent trading relationships at the lowest possible costs. And document errors cause additional costs on both sides.
Suppliers have been known to cry foul when they believe the fees and processes for testing are unfair and have even called them abusive. But a recent report from Spendmatters points the finger at the best (at least in the eyes of Gartner, and in its financial results) performing supply chain in the universe - Apple Computer.
Regardless your personal opinion of the company, Apple has tremendous power over its market. It sets the bar for product quality and innovation. But that same power appears to let the company bully its suppliers to do things they might not otherwise do. Things that lead them to become unprofitable, to drop out of the market they were pursuing, and ultimately to become insolvent.
Are other companies guilty of the same tactics when it comes to using the power they have over their suppliers? I don’t have the facts and haven’t interviewed enough retailers or suppliers lately to get a solid opinion, but I believe there are cases in which retailers push their suppliers beyond what is reasonable in terms of meeting timing and compliance goals.
At the same time I believe there are suppliers who complain about having to comply with even the most reasonable stipulations imposed by their customers.
Is any of this fair? It isn’t. Are some of the players on both sides unreasonable? Definitely. And are there real problems that stand in the way for both retailers and suppliers meeting their profitability goals? Absolutely. But here’s the thing. We are all in a free but competitive market that operates on Darwinian principles. Surviving in this marketplace requires intelligence and agility. As we close in on 2015 it’s incumbent on every player to find the best way for each to approach their supply chain partners, implement the tools that make their business profitable, and decide whether they are in the right business with the right trading partners. Last modified on Monday, 15 December 2014