Supply chain reaction

@mrobertson

Supply chain reaction

In one of the lighter recesses of the internet, a discussion can be found on the origins of a quote. It is something like this…

“People may forget what you said, or what you did, but they will never forget how you made them feel.”

Now, whether it was a senior official in the Mormon Church – as seems most likely – or the late US poet, Maya Angelou, it doesn’t really matter. The words are profound and true.

The reputation of us all, whether as individuals or institutions, is of course defined by what we say and do, but the real emotional bind must be in how we make people feel.

For those of us making a living in a customer business, our success or otherwise depends almost wholly on our ability to serve those customers well. Making them feel valued and cared for and helping them succeed is the bedrock of our sustainability, as well as our enduring capacity to be efficient.

For larger businesses, efficiency is more of an industry in itself. Nearly every spending decision is pored over and then sanctioned (or not) through great armies of procurement teams; these are commercially driven and often invisible people whose job is to secure the best terms for a company from the smaller enterprises which contribute to their success in some way or another. The joy of winning that important contract is often tempered by the knowledge of what happens when the professional buyers get hold of you.

As our largest companies think forensically about how customers feel and how consumers choose where they acquire goods or services, do they apply the same focus and rigour to the feelings and decisions of those who supply them?

If they do not, then they should. In recent years, that relentless drive for value and efficiency at the top end of the economy – inhabited by our largest and most profitable companies - has also served to apply great pressures on its lifeblood, which is essentially formed by the the smaller and medium sized enterprises that are in turn sustained by relationships with their bigger and wealthier peers.

According to the Federation of Small Businesses, there are 5.6 million small companies in the UK, making up 99% of the country’s business community. Together they employ 16.3 million people and many others depend on them too. A recent survey by the FSB found that more than 80% of those businesses engage with communities and charity, donating much-needed time and skills to the people who arguably need them most.

One need not be an economist or sociologist to imagine what the great benefit to the country is of these small businesses, nor to understand how many people rely on them for a good life and who are ultimately the ones who absorb the more negative impact of over-zealous procurement and financial managers saving a few pounds here and there or demanding that you wait three months or more to be paid for services provided, to keep the bank balance of the bigger company swollen for longer.

These are also the people who will increasingly define the reputation of our biggest brands. Making people feel good is not just the job of the clever marketeer selling a new phone or something nice to eat. Being a responsible corporate citizen does not stop at measuring a carbon footprint or painting the local swing park. Treating the small businesses in your supply chain fairly and with respect will increasingly become a simple measure of success or failure. This is sustainability in its purest form.

Malcolm Robertson is a founding partner of Charlotte Street Partners.