Brexit and Retail Part 1: Working with Your Suppliers in a Post-Brexit World

Transformation

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October 10, 2016

There is a pandemic sweeping through UK retailers – BREXITIS. Symptoms include paralysis, fear and introspection…

In a series of 3 bite-size blogs, the experts at North Highland will show you how you can fight Brexitis with the positive side-effects of being set-up for success and more resistant to future Business health scares.

The first in the series is “Working with your Suppliers in a Post-Brexit World”…

Rather than focusing on the much talked about political risks to supply chains in the wake of Brexit, the potential domino effect and the possibility of future border controls, duties, quotas and other barriers, we want to focus on what is in a retailer’s span of control to try and minimize the disruption to their business. Key to that is developing the right relationship with a supplier, whether they are manufacturers, vendors, wholesalers or distributors, which can drive down costs, make drastic improvements to customer service and enable a retailer to gain a competitive edge in this turbulent marketplace. Achieving this requires a change of attitude towards suppliers. So, how can retailers prepare themselves to effectively develop and manage strategic partnerships with suppliers of the future in a post-Brexit world?

Prioritise Procurement

The role of procurement has to evolve. Traditional focus has been on distribution and customer fulfilment; on procurement’s ability to accurately process transactions, guarantee the availability of products and services and drive value for money.

With the advent of Brexit, coming off the back of the National Living Wage and a sluggish UK economy much of the focus on reducing price and total lifecycle costs has already happened and there’s only so hard you can squeeze that lemon. Instead retailers need to shift towards an approach hinged on process optimisation and cross-functional collaboration. Procurement’s strategic importance has increased. In order to manage the suppliers through the turmoil of Brexit, retailers have to adopt a value-driven attitude with internal/ supplier collaboration at the heart.

What are the benefits of effective Supplier management…?

Without an effective approach to managing suppliers, companies may be forgiven for viewing procurement simply as negotiation; it is difficult for them to see where they fit within the framework and vision of the business. As a result, this could generate a reluctance to make a best effort to combat the increase in costs due to the effects of Brexit and suppliers may hold back from offering new and innovative products/ services. You need to ask yourself whether to squeeze every last drop from your contracts to impact your bottom line now or invest in long term relationships and treat your suppliers as partners and reap the rewards in the future, long after your pre-Brexit currency hedging has ended. There are several benefits associated with SRM, all of which culminate in a healthier bottom line, including:

  • Appointment and collaboration with a Category Champion: Establishing a single point of contact for each Category working together to manage the supplier relationship will drive growth, customer value and loyalty, whilst contributing to efficiency and effectiveness via improved communication and data flow.
  • Reduction in costs: Setting up new deals with suppliers can involve significant cost. Effective management of key, existing suppliers can deliver cost savings in the long term and reduce availability problems, delays and quality issues. That means a better overall service for the consumer.
  • Increase in efficiency: As relationships develop, communication improves. This transparency allows suppliers to meet the buyer’s needs more effectively and the flow of operations will greatly improve.
  • Protection of reputation: As understanding of the end-to-end procurement process increases, the risk of damaging your brand from any fault of the supplier will be minimised.
  • Consolidation of the supply chain: As specific areas of the two businesses collaborate, both parties gain a greater understanding of each other’s inner workings. In certain instances, both parties may be able to adapt their own working practices to generate further efficiencies and operational advantages.

Focusing on relationships rather than readies is driving forward thinking retailers’ front-end strategy. It’s all about customer retention, loyalty and personalisation. It’s time to adopt this mantra and turn your suppliers into partners. As a partner you can be front of the queue to leverage their insight, innovation and work that they are already doing by influencing their strategic roadmap and ensure there is a focus on what is really important to you.

Next we’ll be looking at how learning lessons from the recession will keep Brexitis at bay!

For more information contact simon.piesse@northhighland.com

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