Can brands save profits without squeezing suppliers?
HICX CEO Costas Xyloyiannis says brands can save costs without compromising on resilience by building strong supplier partnerships
With inflation driving down sales, manufacturers can only push costs up so much and they’re feeling the pinch. While the reflex for many will be to squeeze suppliers, this isn’t the solution. Pressuring suppliers to drop prices only limits the resources with which they can work. This blocks the value that manufacturing brands can draw from these businesses, such as dependable supply and information that prevents risk and attracts opportunities.
So, how can brands protect their profits while also remaining productive, compliant, and inventive? Through trustworthy supplier data: the foundation on which brands can work together with all their suppliers towards cutting costs without conceding these vital goals.
Get good data early
When better to establish dependable data than the moment each new supplier is integrated? Data is at the heart of every good supplier interaction. Without it, suppliers are likely to have difficult relationships in the future, making it harder for them to provide essential information related to areas such as sustainability risk and to propose innovations that contribute to building brand reputation. But suppliers who have strong relationships with their customers are more inclined to go the extra mile – a recent HICX study shows that if they are low on stock, suppliers are 20% more likely to prioritise an order for a customer-of-choice.
The best supplier data is in the form of a “single source of truth”. When data is considered trustworthy, brands can make the working relationship significantly easier. This simplifies what it takes to receive helpful stock, information, and ideas. Underpinning these goals is reliable supplier data, the collection and safeguarding of which should be established early.
Getting this right also requires brands to control how changes to the data are managed. There is a simple analogy with removing plastic from the world’s oceans – it’s pointless cleaning what’s already there while neglecting to address future pollution. Rather, invest disproportionately in preventing future plastic from entering the water. The same is true with supplier data. A ‘single front door’, through which all new data and all changes to existing data must pass, is essential. That door has both a technical and a governance role: it disables any other systems from making changes and governs who can make changes and under what circumstances.