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Play Hard Nosed Buyers At Their Own Game

2012-03-17 - David Sables - CEO
Source - The Grocer

Many were appalled by the recent stories of Waitrose imposing £60 fines for deliveries made 45 minutes late. But in truth, this is just Waitrose catching up on the more aggressive side of the procurement job.

Imposing supply fines is just one of the hundreds of tactical squeezes that can be placed on suppliers by buyers. The transactional flow doesn't help the supplier much here and many are lost on managing it. Put simply, you send out product and they send you money. The issue is that they send the money a long time afterwards-this is bad enough for supplier cashflow but the issue is compounded when the retailers then raise spurious problems and throw invoices into a query bucket, or deduct fines from what they owe. They keep your money while a query is resolved; guilty until proven innocent

If you have agreed to accept such fines as part of a contract with the retailer, then I suggest you renegotiate. If, like most, you haven't entered such a weak-willed agreement, then you are on the receiving end of tactical plays that our long-awaited adjudicator ought to judge illegal. Don't just take it on the chin. There are many techniques you can deploy to level the playing field and none include moaning about how unfair it all is.

I don't blame retailers tor trying it on. Normally they get rewarded by a few who cough up believing it's just the cost of doing business-pause while I roll my eyes. And the reaction of smaller suppliers is often a begging mindset or a move to negotiate, offering concessions in service, or further investment, for payment of money that was already theirs.

But you shouldn't accept retrospectively imposed fines as a change in terms. Change your mindset; in your shoes what would that same buyer do? Why not invoice the retailer for lost sales through inefficiency of replenishment at their end, e.g when you got the product to them but they didn't get it out on shelf.

Waitrose happily trots out that "it's only fair that late suppliers contribute, and £60 fairly represents the cost to our business". Well then, it's only fair for them to contribute to the lost profit you suffer due to retailer failures. It's all negotiable. Why not throw a few fines of your own into the mix? Always take the high ground of course. Cancel yours if they cancel theirs!

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