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Business relationships cannot proceed anywhere with only suppliers bearing the costs. Image Credit: Shuttertstock

During these times of crisis, I remain concerned that certain people in business are deviating from ethical obligations and indulging in unethical practices. Suppliers are resorting to artificial price escalations, traders are hoarding essential supplies citing supply challenges, and even clients are gouging suppliers with unrealistic demands.

These are times for respect, transparency, and ethics to rule the relationships, not opportunistic postures. The principals, agents, clients, and their providers need to work together towards the common goal of sustaining themselves. Companies are planning to take proactive steps, while others are unfortunately resorting to hastily hatched approaches in the cover of exigency measures. Under such situations, the fundamental rule of thumb is for calmness and foresight when it comes to strategy and execution. For organisations to expect tangible results, especially on the cost front, they need to build alliances, not frontiers. Principals must move away from knee-jerk reactions and putting outrageous demands on their supply chain.

These approaches can break the spirit that is critical to any sustainable partnership. Suppliers also have to ensure pricing is aligned with contract deliverables and not changed unprecedented market conditions.

Cut rate

In the last few days, we have received calls from some of our clients for arbitrary reductions in cost. We cautiously attended to these dictates as we knew that these actions would pose a business continuity risk as well as impact our company, from employee morale to the bottom-line.

In spite of these being unilateral demands, we engaged the client to discuss the broader impact. In such a situation, ethics and the spirit of partnership bind both parties to collaborate.

Building an ethical partnership requires mutual respect, transparency, and honesty with a shared goal. In such testing times, it is the mutual resolve that delivers results, not reading between the lines of contracts.

Stick with the known

Business requires cutting costs, and this can be best achieved only through time-tested solutions from our existing supply chain. Clients have to leverage these proven supplier relationships instead of seeking new ones.

History foretells that relationships fostered during difficult times have time and again proved their mettle to build sustainable businesses. Businesses need to share data, experiences, and assess risks with their supply chain partners, including employees, to build mutually vetted models where risks are shared for a common cause. For instance, a key client with whom we have worked for years, approached us to cut the costs by a third.

Instead of frowning at them, we accepted it. After studying its business predicament, we were able to offer a viable model with significant cost benefits. This was made possible only after a transparent exchange of cost elements, baselines, and benchmarks and based on a rationalisation of cost assumptions.

This is an example of how a joint exercise with a shared goal deep-dived to agree on taking mutual responsibilities. In these challenging times, putting demands on suppliers or seeking undue advantage of clients are counterproductive.

It is not the time to explore relationships for convenience. However, this is the time for sensitivity and compassion too.

Partnership in these times should aim to maintain a balancing act between realistic and the doable than expecting something impossible.

- Tariq Chauhan is Group CEO of EFS Facilities Services Group.