Over recent weeks, the discovery of horsemeat in beef products has led to a range of processed foods being withdrawn from sale across Europe. This story has continued to grow and shows no signs of disappearing quickly, which I’m sure is keeping the likes of Tesco, ALDI, Findus (and the rest) awake at night.
But there are some valuable business lessons that even the smallest businesses can learn from these unfortunate events, explains James Richardson of Metric Business Growth Accountants.
1. Keep your suppliers close
We all know that the success of our business involves staying close to our customers. But when was the last time you thought about your suppliers? When engaging a new supplier, check their track record and assess their integrity and ethics. Speak to their existing customers for unedited testimoninals and consider undertaking credit checks.
Perhaps even more importantly, once you have started working together, continuously monitor the quality of the service and / or product provided.
2. Product is everything
It doesn’t matter how good your service or marketing is, if the product doesn’t meet customers’ expectations they won’t be coming back. A quality product must not only meet any legal and regulatory requirements, it should also satisfy changing demands. Technology is increasing the range of what is possible. At the same time, customers are becoming more particular about their own requirements. Quality involves keeping pace with these customer demands.
3. Price is not everything
Over the past ten years, the likes of Tesco and ALDI have fiercely followed a strategy of pushing their suppliers to drop prices ever lower, so they can pass on the savings to their customers. However, as recent weeks have shown, there is a limit to how much customers are willing to sacrifice in order to benefit from a lower price.
Don’t be fooled into thinking that customers are solely focused on price – it’s far better to provide a quality product or service than to try to compete on price with your less desirable peers.
4. Contingency planning
Things will go wrong from time to time. It’s just a fact of life. It’s how businesses manage the process when things fail that matters. The aim of contingency planning is to minimise the impact of a foreseeable event and to plan for how the business will resume normal operations after the event. The great companies have learnt that even public relation nightmares can help strengthen a business’ brand if handled correctly.
5. Responsibility cannot be outsourced
We are living through an outsourcing revolution. Every business, regardless of size, is able to outsource certain operations that would traditionally have been performed in-house. When done for the right reasons, outsourcing will help your company grow and save money. However, the headlines of recent weeks should act as a reminder that whilst certain tasks can be outsourced, responsibility cannot.
So, here’s the tough question: How happy are you with your suppliers?