Do good things and good things will happen – Karma in the supply chain

 

KarmaYou know things are going a bit wrong when Clients are having to publicly declare that they are not out to screw the supply chain, as Asda did this week in one of the best headlines of the year so far. The supply chain could be forgiven for being wary, especially when we have had our fingers burnt so much in the past. From Tesco’s much publicised demand for 10% reduction of fixed price contracts half way through, to frameworks being disbanded once the recession kicked in and the OFT slamming the industry for the cover pricing we so often only carried out because our clients asked us to. I’m not saying the industry is an innocent victim but I am saying that the client plays a much larger part in the way the industry acts than is often perceived by those outside of it.

Importantly, this affects the people within the industry and the communities outside that we are so often trying to engage with.

Examples of how clients can inadvertently affect these factors are: –

  • Focusing on short-term results that will make an individual project look good and ignoring the longer term need of companies and the sector. Contract clauses demanding x amount of new apprentices per job – this becomes an issue when previously employed apprentices are not counted meaning companies can be forced to let apprentices go to make space for new ones.
  • Clashing Clauses – Requiring a strong supply chain framework that works with and supports the supply chain in one part of the contract but then demanding x% of supply chain is from the local area meaning existing supply chains are not able to tender for works.
  • Unrealistic clauses – Setting unrealistic target on the numbers of individuals from specific minority groups (eg Women and black minority ethnic) to be employed. Especially if this does not consider retention or progression of those individuals as it can result in “role not responsibility” and people being lured away from jobs where they were valued into jobs where they are seen as a token requirement.

Maybe the most troublesome thing about these clauses and others like them is they add up to a tick-box attitude, with contractors feeling that when they put the work in it’s not recognised and often negatively impacts on the business and the community.  Meanwhile organisations that have failed to comply with these clauses simply walk away unscathed having equal success with the next tender. Quite often all these clauses do is reduce trust and increase stress.

 

So what is the alternative? Besides of course using the Be Fair framework? Liverpool Housing Trust (LHT) appears to have a fantastic solution – they don’t have any employment clauses at all.  Instead, they work with their subcontractors to create a supportive environment that enables them to create trust. The result of this? Last year their supply chain employed 50 apprentices with the help of LHT and some forward thinking that enabled them to keep prices static – they used an organisation to audit the firm’s operations and advise how they could make savings with anything over the proposed increase being seen as profit for the companies.

Clients need to starting working on building trust with their supply chains as without this we will never fully realise the potential of the industry.