Just like the Brexit negotiations at present, all transactions, negotiations and business relationships involve trust. The same applies to all personal relationships it goes without saying. However, this trust seems to be in decline. More and more transactions and negotiations seem to be happening by e-mail these days, and as anyone will know only 15% of communication is to do with the words we speak, 40% is tone of voice and an astonishing 45% is body language. Without meeting people and seeing into the whites of their eyes we lose most of our communication ability, yet this is how many businesses encourage their staff to operate, especially with larger companies, where the buyers are loaded with so much work, they do not have meetings in many cases.
If the trust decreases, so do long-term business relationships and, I believe, inefficiency increases. The constant chopping and changing of suppliers to save 2% margin brings in more than 2% inefficiency to a retailer. The use of 30 direct suppliers rather than buying all those 30 brands through a wholesaler is not only hugely inefficient but bad for the planet, yet one buyer I talked to this week told me she was only assessed on gross profit margin. The extra time taken by staff to place those orders, receive 30 deliveries rather than one did not affect her figures, but, of course, it has a negative effect on the business as a whole. It is not only the NHS that has massive inefficiencies within it!
Inefficiency and lack o trust is rife at all levels of the supply chain to independent retailers. Many producers set up a relationship with a wholesaler to grow their business, which does not always achieve the desired effect. Why? Because many of those producers not only keep the large accounts to deal with direct, despite those accounts also being supplied by the wholesaler. Not only that but if a juicy piece of business comes along, they will work on it excluding the wholesaler and take on a new account direct. Guess what? The wholesaler’s sales team loses trust in that producer and stops talking about their brand to their customers. It really isn’t rocket science! The wholesaler ends up with a portfolio of brands some of which are only being talked about and actively sold by a small percentage of their sales team. Clearly sales people have to earn commission, and this commission is not earned for a one-off sale, it is earned over a period of time as the retailer buys that brand for a year or much longer. The sales person is going to sell the brands where they are the main route to market and the producer is not going to end up as a competitor.
That was the main conclusion this week from my thinking. Whilst, of course, we have other wholesalers who compete with us wherever they can, by far the largest competitor is all the direct business that our suppliers do with our customers. It is time for change otherwise we will all die to inefficiency, and, in the process, we are killing the planet too. Producers need to act in a way that does not destroy trust and wholesalers need to do the same and act with equal integrity. I will finish with an e-mail I received from a customer recently, all about trust:
“Just thought I'd drop you a line... We are a small business who have recently become your customers. I have to say we normally shy away from using large wholesalers as we aren't fans of the bull$hittery usually surrounding dealing with them, dodgy salespeople, lack of clear pricing, lack of stock of what you actually want to buy etc... Dealing with you guys has been simple, straightforward and a real eye opener. Keep up the great work and (name of CF person) has been great, not too pushy, but keen to advise, help and inform! Top work team.”