I've got a copy of a letter that has been sent by Kemira Growhow, the giant fertiliser and feed company, to all of its UK hauliers. The letter informs them that the company will be reducing the rates it pays to hauliers by 5% from the first of May. What is even worse is that the rates that they are cutting were set in Oct 2000; common sense tells you that it's about time the rates were increased, not reduced by 5%. Intrigued I decided to have a look at Kemira's web site. The main news item tells the reader that Kemira are building a new plant and that "The investment is worth € 21 million and will be covered using GrowHow's own cash flow". Not short of cash then, so why the bullyboy attitude towards its hauliers? A 5% cut in the rate Kemira pays to its hauliers is a drop in the ocean to this company with € 1.2 billion sales and 3100 employees. Wondering about the company's attitude I looked at another story on their web site; this time it was about the company's name that was changed in February. The site tells us:" The new company name and logo incorporates a three word 'strap line'; partnership · knowledge · solutions"
In a message to employees and customers during launch events throughout the world, Heikki Sirviö, President, stated that these three words summed up precisely what the company has to offer through "establishing strong and lasting partnerships."
Strong and lasting partnerships? You can't create a strong and lasting anything by forcing your small suppliers out of business!
The letter to the hauliers was sent by the UK Logistics manager and you have to wonder if he has lost the plot altogether. The trend nowadays is exactly what Kemira have put on their web site - to create strong and lasting partnerships. All modern organizations are working more closely with their suppliers to integrate and improve efficiency. Close supply chain integration is especially important to every organization, but here we have the UK Logistics manager cutting the three-year-old haulage rates and thereby stalling any hope of its hauliers being able or willing to invest in new technology.
I am currently working with large haulage users such as Proctor & Gamble, Gist and Carlsberg Tetley. They also want to reduce their haulage costs but, unlike Kemira, they realize that the way to reduce costs is to use modern techniques and increase their overall supply chain efficiency. These companies actively encourage their suppliers to work more closely with them to introduce modern EDI and computer systems that will benefit both parties. Investment in closer collaboration and modern electronic trading methods can provide much higher savings than a 5% cut in haulage rates. Kemira's President realizes this and has even included the word "Partnership" within his company's logo so why are his announcements ignored within his own organization regarding its hauliers?
