Client: European Multiple Retailer
Following a reduction in scale after selling part of the business there were obviously going to be difficult negotiations with the suppliers. Additionally, the skills of the buying team were very variable so a general “upskilling” was required.
At a time when overall purchases were declining, it was critical that the retailer continued to achieve at least the same terms as before the disposal. There were four key objectives:
- Implement a robust framework to enable them to move as much of the “back margin” as possible to off-invoice terms. (to avoid the situation that Tesco had encountered).
- Have a clear supplier management framework
- Improve the overall negotiation capability of the buying team
- Enhance the line managers ability to coach a best practice negotiation framework.
It was clear that anything that looked like a “form filling” exercise was likely to be extremely negatively received. In my experience anything that is presented to busy executives as a suggestion rarely gets implemented – so I worked with the senior team to agree what processes the company was prepared to insist on. We designed a process for managing the suppliers at a strategic level and a tactical level – and also ran a number of negotiation workshops for the buying team to improve their capability. We were able to then benchmark their overall capability against a number of other retailers to identify any improvement areas.
Category managers were also trained how to use a behaviourally-based framework to help coach their teams to avoid the usual anecdotal assessment of behavioural change.
The client reports that the rigorous process has definitely improved the management of the suppliers at both a relationship level and a financial level.
The processes are now embedded in the business and are used consistently. Follow-up sessions are planned later this year to further refine the new processes.