Strained Supplier - Retailer relations: addressing "Greedflation" amidst rising costs and tensions
It is imperative to address the concerns raised in a recent article in Supply Management, Supplier-retailer relations at ‘breaking point’ regarding strained relationships between suppliers and retailers. As a result of the cost-of-living crisis and inflationary environments, the cost of raw materials and other inputs have skyrocketed, leading to a breakdown in collaboration between retailers and suppliers and accusations of “greedflation” on both sides of the fence.
According to Ged Futter, a retail analyst and former buyer at Asda, the biggest problem lies in the lack of collaboration between retailers and suppliers. Retailers are increasingly attempting to bully their suppliers, leading to strained relationships at the breaking point. Suppliers are finding it difficult to plan for the long term and do not know what to expect, making their jobs much harder.
The finger of profiteering or “Greedflation” is being pointed in many directions including Unilever and Sainsbury’s. Unilever’s CEO, Alan Jope, insists that only 75% of higher input costs are being passed on to help consumers whilst Sainsbury’s CEO, Simon Roberts, said the firm has spent £560m keeping prices low with a new initiative to lower basic food prices even more. (Source- Unite Report - “Unite Investigates: Profiteering across the economy – it’s systematic”)
While it is understandable that retailers may be concerned about rising costs, they must not lose sight of the importance of maintaining healthy relationships with their suppliers. Tesco chairman John Allan's claims that suppliers are taking advantage of inflationary environments environments to unnecessarily increase costs only add to the ongoing tensions between retailers and suppliers. This is a clear indication that the current system is unsustainable and requires intervention to prevent the situation from deteriorating further.
One solution to this problem is supply chain finance marketplace, which can help alleviate the strain on suppliers while also promoting long-term relationships between retailers and suppliers. Supply chain finance marketplace is a financial solution that provides suppliers with access to finance, based on the creditworthiness of their buyers. This allows suppliers to receive payment for their goods and services earlier, providing them with the cash flow they need to operate their businesses effectively.
Supply chain finance marketplace offers numerous benefits to both retailers and suppliers. For retailers, it allows them to extend their payment terms while providing suppliers with access to low-cost cash flow, which can help reduce the risk of supplier insolvency. This is particularly important for smaller suppliers who may be more vulnerable to cash flow problems.
For suppliers, supply chain finance marketplace provides a reliable source of financing that is often more cost-effective than traditional financing options. This helps suppliers manage their cash flow and can help them grow their businesses more sustainably over time. By improving the financial stability of suppliers, supply chain finance marketplace can also help promote stronger relationships between retailers and suppliers, leading to better collaboration and more long-term planning.
In addition to the financial benefits, supply chain finance also promotes transparency and visibility in the supply chain. This can help reduce the risk of fraud and improve efficiency of the supply chain. By promoting better communication and collaboration between retailers and suppliers, supply chain finance can also help improve resilience and reduce the risk of supply chain disruptions.
The Crossflow working capital marketplace is specifically designed to support supply chain diversification through advanced technology, robust security measures, and AI capabilities. It enables suppliers to access fast and flexible early payment finance, thereby increasing their working capital and significantly boosting margins for both the corporate buyer and other stakeholders. This marketplace serves as a valuable tool for maintaining positive relationships between retailers and their suppliers.
There is an interesting profile on Crossflow in this recent article giving some insight into Crossflow and perhaps explaining how it has grown to be Europe’s No 1 Fintech.
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Kevin Hayden is an executive level professional with over 35 years of Fintech, Investment & Commercial banking, and software sales & services industry experience, managing key major business and transformation change teams. With an economics and banking background he is driven by challenge and excellence at all levels, he is committed to delivering a long-term partnership with clients that foster trust and build reputations, focused on the transformation of supply chain finance that helps and assists everyone along the journey.