Emma Scott: Trust-based relationships are key to success

The recent scandal that saw horsemeat detected in a range of products claiming to contain beef has made the food industry begin to wonder whether it can trust some of its suppliers.

Tesco reported a loss in sales in the three months following the scandal, which caused its share price to drop by 5%, demonstrating the impact of supplier relationships on organisations’ reputation.

Of course, supplier relationships vary between employers. Some are purely transactional, but those that have the greatest impact are nurtured and built on trust and transparency, so here are a few basic rules for employers to follow.

Firstly, select the right supplier, which means working with a business that can deliver products and services that an employer needs and which match its culture and values.

All organisations want the best possible deal, but employers should also consider what really constitutes ‘fair’. Perhaps some of the unscrupulous suppliers that brought horsemeat into supermarkets’ supply chains would not have felt the need to do so if they were making a healthy enough profit margin on the meat they were asked to produce.

Employers can also build trust by being open and honest about their business. They should, where possible, share business plans, forecasts and customer feedback with their suppliers to help them better understand the business and deliver what the employer wants and needs.

Finally, employers should endeavour to build bridges with their suppliers to make it easy for them to share information, good or bad. An employer is far better positioned to resolve an issue if it is flagged by a supplier as early as possible.

But, ultimately, a trust-based relationship should involve employers treating their suppliers as an extension of their own organisation and making them feel part of their team, which will enable both parties to reap the rewards.

Emma Scott is representation manager at The Chartered Institute of Purchasing and Supply