ODI Logo ODI

Trending:

Trending

What we do

Search

Newsletter

Sign up to our newsletter.

Follow ODI

Trust and value through long-term market relationships: better than a short-term focus on price

This Opinion comments upon the practice of 'direct' purchase to global supply chains -- an approach used by Walmart, the world's biggest retailer. The company aims to increase the proportion of goods that it buys directly from producers, moving from relationship-based supply chains and cutting out intermediate supplier functions. However, the model for the US pilot was a form of auction that initiates intense bidding among suppliers. The kind of extreme downward pressure on prices created by this trial could have negative implications for suppliers, consumers, retailers and global citizens at large. The Opinion argues that long-term relationships in supply chains can generate significant gains for business, development and the environment, by facilitating investment in the supply chain and increasing its sustainability through reducing volatility.