Friday, 30 January 2015

Sainsbury's Buyers: Bullies or idiots?

Well, probably not either - but you might have thought those were the choices when looking at how they have been treating some of their small suppliers over payment terms.

Spend Matters blog has been running a series of articles about this by Peter Smith and Prof. Andrew Cox, and I have been chipping in in the comments.  Are Sainsbury's buyers ethical, misguided or completely right?  The TL:DR version is that some people will see this as unethical abuse, others as a legitimate use of their position, and others concern that it is a short term gain with long term damage to the supply position.

My thoughts are that there is likely to be short term pressures that may have long term implications, and that aggressive price tactics may lead to future price rises.  And that it seems bizarre that large relatively cash rich businesses (supermarkets) with low borrowing costs are extending payment terms to small suppliers/contractor who have to pay higher borrowing costs  - if they can borrow at all.  Isn't there a way to get better prices for shorter payment terms instead?

I think that we all agree that the important thing is that the decision should be made after a full and detailed consideration of the implications and results.

Interestingly enough Supply Management magazine just sent round a Survey Monkey questionnaire that might be related to this discussion: Are retail buyers damaging the profession? - you can fill it in here.

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