As someone who has studied economics and been an academic publisher of economics, I’m fascinated about how little the world we live in seems to resemble the world created by economists in their theoretical models. These models traditionally assume perfect competition, perfect information, and rational behavior on the part of buyers and sellers. The market may be better at allocating resources and achieving efficiency than central planning but that doesn’t mean it can’t be made better through thoughtful collaboration.
Take the supply chain for example. Most companies feel they do not know nearly enough about their suppliers: where they get their raw materials from, their work practices and those of their sub-suppliers, or the safety of their products. Any attempt to come to grips with all these issues at the level of individual supplier and individual product takes time effort and money, which impacts delivery times and bottom lines. Frankly, most firms do this work badly or not at all and hope they won’t get caught out.
For suppliers meanwhile complying with the demands of each of its customers separately is equally time consuming frustrating and distracting. Is ensuring compliance and sustainability a source of competitive advantage in today’s markets or is it just the minimum common denominator consumers and governments now demand from all the companies they deal with? Wouldn’t it be much better to check out all suppliers in a systematic and holistic way before placing an order? Surely suppliers would be willing to cooperate in providing the necessary assurances if they only had to do so once for many customers.
At TRG we like to think we can make the market more efficient and more responsible. We’d like to stimulate a discussion not just between retailers and their suppliers but between suppliers and other suppliers and between retailers and other retailers, all with the aim of making managing supply chains more transparent, more responsive, and less costly. If you want to be part of this conversation let us know.
~ Rene Olivieri, Chairman