Small businesses urged to join 'right brain' supply chain

Research from Envirowise has found that the UK’s small businesses are failing to develop effective supply chain relationships, particularly in the retail sector. The programme found that most retailers and their supplies (91%) are in weekly contact, and see the value of effective supply chain management (94%). However, few are focused on developing collaborative relationships and programmes that can underpin stability and competitiveness, particularly during tough economic times.

Indeed, retailers pointed to a cost cutting response to economic pressure that damages relationships, and which threatens long-term survival for the smaller firms in the supply chain:

· 56% shop around for cheaper suppliers during hard times
· 53% push suppliers to cut prices
· 36% seek to reduce the number of suppliers they use

Dr Martin Gibson, director of Envirowise, commented: “It seems that retailers are in constant contact with their suppliers, but are not truly collaborating with them. It could be said that they are relying on left brain supply chain management, focusing solely on logistics and process issues. At some stage, this has to be spell trouble for suppliers, particularly smaller ones who may rely on one or two key contracts for the bulk of their revenue.”

By contrast, some forward looking businesses are beginning to look at developing collaborative supply chain relationships that can deliver real bottom line benefits and a smooth running supply chain, whilst offering a securer future for suppliers. This ‘right brain’ approach is being pioneered by larger retailers working with Envirowise, for instance, the Co-operative Group.

Dr Gibson continued: “The Co-operative Group has identified the benefit of taking a more creative approach to supply chain management - you might say they are developing a right brain supply chain. We are helping them to do that by facilitating collaborative sessions with their suppliers and helping them to innovate.

“The aim is to find efficiencies and better ways to work together. Suppliers are under no obligation to disclose cost savings to their customer companies - this is about collaborating to create better, leaner and more stable supply chains, not just cutting costs.”

Becky Toal, Environmental Programme Manager, for the Co-operative Group says, "We believe that, as the environment is important to us, so it should be to our suppliers, and Retail Therapy has helped in getting this message across. I would recommend the programme to other businesses looking to achieve something similar.

“We have a large number of suppliers and this programme has really opened their eyes to potential cost savings.
“The Envirowise FastTrack visits were a particularly valuable aspect of the programme, and these have contributed to several of our suppliers making substantial cost savings.”