58. Responsibility

Dear Jan,

I see another benefit of the crisis. I believe that one of the positive consequences of the crisis will be that suppliers will be forced by their clients to take more responsibility for the product or service delivered.

Back in the old days “guarantee until the door” was the rule, now the client can pay when the product or service actually works. For the consumer, this results in a very smooth take-back policy from stores and websites – “Moneyback” guarantees, free products and services and short notice periods for subscriptions. This trend is also to be found in business-to-business. For example, a part of the price is a percentage of the savings that the service or product from the supplier realizes, or it is a percentage of the extra profits which are generated.

Customers are demanding more and more effort and commitment from suppliers. Companies which are able and willing to meet these requirements will do good business. The ideas which are becoming more important and are spreading across all sectors are: having customers share in the profits that you generate with them and helping your client to sell more, so they can buy more of your services.

It also requires a lot more transparency on the part of the supplier and the customer and the client to determine open cost calculations and a reasonable margin for both parties. An integral part of this is that the customer takes his share of the risk. The customer and supplier become partners with a common goal: sustainable profitability for both parties, rather than short-term profit maximization for the one or the other.

In a transparent process, both parties have a lot more consideration for each other’s challenges and (im)possibilities, cost structure and revenue. This improves the efficiency of the supply chain and, ultimately, everybody wins. Of course, this is mainly for companies with a very ethical attitude towards working with each other, society, and the required sustainability of the company.

The relentless focus of many large companies on maximizing profits and the one-sided focus on shareholder interests can turn against these companies and their executives. We see this occurring with banks, insurance companies and other big corporations. The level of social discontent is growing and a lot of ethical entrepreneurs and employees form a strong counterforce which, I think, will be the new sustainable and successful way of doing business.
Regards,
Gerard