Could supplier Service Level Agreements (SLAs) redress the balance between independent retailers and suppliers? Tony Robson, the co-owner of Day True, considers the possibilities.
As an independent retailer, we are continuously asked to sign agreements issued by our suppliers, particularly the larger more corporate businesses, where we must adhere to their rules, such as: ‘minimum number of displays’, ‘minimum turnover’, ‘cannot sell items individually’, ‘must be at least 25% of your showroom’.
I’m sure most independents experience something similar and many other demands besides.
As a retailer, and as a customer of these suppliers, we then have the pleasure of paying our suppliers to showcase their products in our showrooms – which are becoming increasingly expensive to run – taking up valuable square footage in-store. While we are their route to market to our valuable client base.
It would also be fair to say that the service issues are not with just appliance manufacturers and more significant corporate businesses.
Many projects require independents to depend on smaller specialist companies to help deliver a project. These might include bespoke furniture makers, worktop fabricators, bespoke showering companies – all examples where I suggest a ‘way we work’ agreement would be beneficial to both buyer and seller.
I recently visited a friend who works in the aerospace industry. I mentioned the service issues we are having as a business, and as an industry, and asked how his company navigates these issues effectively.
He told me they would, as standard practice, have Service Level Agreements (SLAs) in place between the trading companies – these are standard in other industries and larger corporate businesses and are used to agree on how both businesses trade.
An SLA would outline what the purchaser expects and equally what the seller expects and, yes, some do have compensation agreements for costs incurred if the agreement fails.
Good Service Level Agreements should have an agreed set of ‘key performance indicators’ (KPIs) that are regularly monitored and actions put in place for continued improvements to be made.
They should also be implemented with the mind-set that if they do not adhere to that, both the buyer and seller, should be willing to walk away from each other if differences cannot be agreed and improved.
As a small business owner, I fully appreciate that the time and effort to put these agreements in place is another energy-sapping process.
However, I firmly believe that the current balance of service agreements is firmly weighted in favour of the supplier and that an industry-recognised and agreed ‘service template’ would only improve us all to deliver world-class service levels for all of our customers.