Creating value from a preferred partnership
Before I started my career as a trade show constructor I led a successful building company. Whether it was real estate or renovations, houses or apartments, public or private sector… we turned our hands to anything! The showpiece of our portfolio was the renovation of a full wing of the well-established abbey of St Andries in Zevenkerken (Loppem). To make a long story short, I was a contractor and proud to be one.
At that time I was aware that some people used the term “contractor” rather as an insult than as a job description. Assignments that are contracted to the cheapest supplier (e.g. public contracts) are the cause of this perception. At first sight, nothing to really worry about, however there is a catch. It incites less honourable people handle their offers in a creative way.
After 20 years in the construction sector I had seen enough. So I decided to look for a new challenge. My statute changed from “contractor” (in building industry) into “supplier” (in fair trade construction). But even the word “supplier” does not sound great. If you come across the meaning of supplier in contract law rules, you will find the following sobering description:
"A supplier is a party obliged to deliver the agreed goods and/or services.”
... This sounds like the beginning of a burnout, right?
I would not want to bind to an agreement full of obligations just like that. I’d rather make a positive contribution to people. In a business environment this is of course not without obligations. If you are only judged on your obligations, you might have the tendency to only deliver what is mentioned in the agreement. Every gap in the contract could lead to malpractice.
A contract that is solely price-based is the best opportunity for those who cannot stand ethical entrepreneurship. It is just a matter of finding the “gaps”. Setting unit prices of underestimated goods as high as possible is for instance advantageous, whereas overestimated goods should be priced as low as possible. This way you are likely to be chosen as the cheapest supplier while presenting the highest bill. All without offering extra added value.
Too bad people often believe in the “lowest price”. Anyway, we live in a free country and everyone is free to believe what they want.
FROM SUPPLIER TO PREFERRED PARTNER
You can find various ways to prevent this outcome and thus not to become disappointed:
You can work with suppliers (e.g. contract law rules) and hire an army of lawyers who try to find a way to fill in every gap of your contract. Next, they set up an agreement of as much unilateral obligations as possible.
… Or you can build a preferred partnership relation with both your customers and your strategic suppliers.
Beware! The prescribed expectations must also be met. Besides, there are unmentioned expectations in the contract that are taken for granted. The objective of this relation is to better respond to client needs, also those not enforced by law. The relation is based on a long-term perspective and its cooperation aims at strengthening each other. Partners must therefore be carefully selected. The choice is not just price-based, but depends on the whole picture of the organisation: their skills, know-how, social responsibility… Finally the choice is based on “the best mix of price, delivery reliability, quality and cooperation level”. Especially the last ingredient makes the difference between supplier and partner.
As partners it is essential to focus on common interests. ‘Cost minimisation’ for the customer and ‘profit maximisation’ for the supplier are obviously incompatible objectives but does not mean ‘unachievable’. It is important to keep the “added value” top of mind and to avoid costs that do not add any value at all. If you pursuit this, common advantages will come up. In the end, sustainable relations on the long term create value to all of us.
I am convinced that this mindset also pays off in an employer-employee relationship. Instead of reinforcing polarisation, it is clever to start from a common interest. You might regard me as a naïve person, but anyway … we live in a free country where everyone is free to believe in what they want … and I… I believe in partnership with clients, suppliers and employees.