If you haven’t already delivered bad news to a supplier, you’ll likely have to soon. Here’s how you should do it.
Economically, this year is officially the worst year since the Great Depression. And while we, as procurement professionals, have largely been shielded from the worst of it owing to our critical importance to organisations, many others have not been so lucky. Many businesses, too. And unfortunately, some of those businesses include our suppliers. Even worse, sometimes it may be us that has to deliver some bad news to them.
Psychologically, humans find it very difficult to deliver bad news. Procurement professionals would agree with this finding: telling a supplier, especially one that you’ve cultivated a valuable strategic relationship with, that something drastic is going to change can be nerve-racking at least, terrifying at most. But can you deliver bad news in a good way? You can, and here’s how.
What kind of news might you have to deliver at the moment?
So much is changing in the economy and our supply chain relationships at the moment, that there’s literally hundreds of different types of bad news that you might have to dish out to your supplier. But for most companies, bad news will fall in a number of categories.
Firstly, you may need to tell your supplier that you have to reduce your volume. On the surface, they may see this as unfair, especially if they know that your overall output hasn’t changed much. But what they may not understand is that in the current risk environment, you can no longer be reliant on them and need to diversify. Similarly, you may not be able to use your supplier at all due to a whole host of risk-based reasons.
Secondly, for just about all of us, COVID has meant that we’ll have to amp up our compliance. What this will mean for your supplier, and they certainly may not like it, is that you now need more documentation from them and more authentication of their sources.
Thirdly, you may need to adjust payment terms. In an ideal world, especially if you work with small businesses, this adjustment may mean that you’re paying earlier. But for many reasons, this may not always be an option due to cash constraints. A conversation about longer payment terms is always challenging.
Finally, COVID has forced many of us to change our requirements. Whether this be a changing product or input spec, whatever these changes are, it will most likely affect your supplier’s business, so may be a difficult conversation.
How should you deliver this bad news?
Businesses all over the world are struggling right now, especially many small businesses. So what may have been a difficult conversation last year, may now mean the difference between hanging on and financial ruin for your supplier. For this reason, you need to approach all conversations with suppliers delicately. When you do, make sure you employ all of the following:
- Listen – before you speak
Usually in organisation-supplier relationships, procurement professionals are used to having the ‘upper hand’ – so to speak. Essentially, we are effectively the ‘client’ of our suppliers, and we expect a level of professionalism and respect as a result. Interestingly, in relationships where the power lies more with one party (even if we may not act like it), the individual that holds the power usually does more of the talking.
Yet given the precarious economic situation, now might be the time to do less of the talking, and more of the listening. Even if you do have to give bad news to your supplier, it pays to first listen to how they have been going, and what, if anything, you might be able to do to cushion the blow of the bad news you’re about to deliver.
- Have empathy – not sympathy
In situations like these, it’s tempting to want to show sympathy to suppliers, especially if they’re struggling. But research shows that sympathy is often misguided, and empathy is better. But what’s the difference?
Sympathy is when you feel bad for someone, and pity them on account. For example, showing sympathy to your supplier when they tell you that they may be going into administration would be to say ‘That’s awful – I understand how you feel.’ This statement could be a little frustrating to them, as in your position, you don’t actually understand how they feel.
Empathy in these situations is always a better response. Empathy is when you take the time to listen to someone and understand what emotions they are feeling, but you acknowledge that you don’t necessarily feel their emotions. For example, an empathetic response might be: ‘I’m so sorry to hear that. I couldn’t possibly understand what you’re going through.’
- Be upfront – but also see if you can give, a little
When it comes to delivering bad news, it’s best to simply be honest and upfront about what it is that you need. Prolonging delivering the bad news drags it out and will most likely make your supplier frustrated and nervous for the future.
But after you’ve delivered your news, don’t just leave it there. See if there is anything you can do for your supplier, and then genuinely try and do it. This may include negotiating a slightly longer contract, flexing payment terms, or referring them elsewhere. Little things help and in this economy, those little things could be everything.
Have you had to deliver any bad news to your supplier? How have you done it? Let us know in the comments below.