Bad reputations can be costly, and businesses are waking up to the importance of reputation management. Whilst some events may seem beyond a business’s control – such as catastrophic events or the behaviour of a third party – their impact is certainly within control and there are actions that a business can take to mitigate risks.

One vital piece of third party activity that businesses can exercise a degree of control over is their supply chain.

If you get your supplier wrong there can be long-term business issues leading to losses, but there are also hidden costs arising from reputational risk. This risk increases if your supplier’s values don’t turn out to match your own and it makes the news.

Here’s an example.


High Heels and Higher Costs

Global accountancy firm PwC sent home one of its employees because she’d refused to wear high heels. Unfortunately for them, this hit the headlines and quickly went viral on social media.

The employee set up an online Facebook petition to change the law about what dress codes employers could enforce. This widened the story’s reach and left PwC’s reputation severely battered.

Sexism is never welcome, but it turned out the policy about compulsory high heels wasn’t PwC’s at all, but the company who supplied their reception services, Portico.

The key point is, the reputation damage remained PwC’s, to the extent that Executive Board Member and Head of People Gaenor Bagley apologised very publicly in a blog.

She wrote that PwC had learned the hard way that, “it is critical that the employment policies and values of our supply chain reflect our own.

Reputational costs are real costs to a business. You can spend months on costly PR crisis management; you can lose existing clients or fail to win new ones; and you can find yourself in difficulties attracting new graduate talent if your ethics aren’t up to scratch.


What Does This Mean for Procurement?

Procurement can have a huge impact on a business. This is not only limited to the reliability and cost effectiveness of the supply chain.

If your third-party suppliers don’t display values in line with your own, the fallout can be very public and very messy.