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Jo Geraghty

Director

Supplier culture

Date added: 10th Apr 2015
Category: Innovation Culture

For innovation to be game-changing the viewpoint of the organisation has to change from ‘us inside the circle, clients and suppliers outside’ to an inclusive and collaborative viewpoint in which the organisation joins with suppliers and customers to create solutions.

Almost unnoticed amidst the first flushes of election fever, on the 26th March the Small Business, Enterprise and Employment Act received Royal Consent and passed into law.  With a remit of making life easier for SMEs, the Act is packed with legislation which covers finance and employment, red tape and procurement.  Interestingly, zero hours contracts, a hot topic in the news at the moment, are also covered in the bill with the abolition of exclusivity clauses which stop individuals from working for another employer, even if the current employer is offering no work.

But it is one area in particular which we are concentrating on here, and that is the supplier relationship.  The Act includes measures which will force the UKs largest companies to report on payment practices twice a year and to be more transparent generally about their contract and payment terms.  This will hopefully go some way towards ending the late payment culture which has been responsible for the cash flow problems of numbers of smaller businesses.

Aside from the moral duty, there is another reason why businesses of all sizes should look to make prompt payment for goods and services rendered.  The business landscape is changing and innovation and co-creation are now very much the name of the game.  However, for innovation to be game-changing the viewpoint of the organisation has to change from ‘us inside the circle, clients and suppliers outside’ to an inclusive and collaborative viewpoint in which the organisation joins with suppliers and customers to create solutions.  This in turn increases the visibility of the supplier relationship.  Fair contract terms allied to prompt payments will go a long way towards building a mutually respectful and mutually beneficial partnership.

 

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