In today’s digital world, information is increasingly available. This puts pressure on businesses to be more transparent in their dealings with customers and suppliers. According to performance management firm Gallup, Inc., transparency in a business-to-business context means companies are honest with their business partners about their goals, their financial needs and requirements, and their level of experience in certain activities.
Transparency calls for making the information businesses need to make good decisions readily available, which in turn positions all parties for effective and efficient trade. Being comfortable in a “putting your cards on the table” mindset promotes openness, good communication, and builds trust and confidence between trading partners.
Demonstrating a willingness to be transparent gets a business relationship off on the right foot, giving it (in theory at least) a greater chance of blossoming into a long-term partnership—particularly valuable when buying and selling perishables.
How It Works To Charles Brown, director of credit at Ampco Distribution Services, LLC in Riverhead, NY, transparency means an expectation that the companies he deals with—buying from or selling to—will provide relevant and necessary information about their operations, including finances.
“We’re just looking for people who do what they say, when they say they’re going to do it,” Brown explains, and this is particularly appropriate when dealing with fresh fruit and vegetables. “In our business, we’re an unsecured creditor, which means a much higher level of risk. So it’s very important in the perishables industry to have high confidence in the partners you’re trading with,” he notes.
Ampco uses Blue Book Services, Inc.’s rating system, which reassures Brown that a trading partner is willing to be open about its purchases and sales, its financial information, and how it deals with various stakeholders. He also uses Blue Book information to look for patterns in how a company handles disputes and whether it is morally responsible, settling any disagreements and problems in an efficient and honorable manner. This way, he says, the company can avoid any “bad players” in the industry.
Though Brown is more comfortable dealing with public companies than private entities, closely held firms can build trust by sharing information with Blue Book Services and directly with Ampco. Supplying extensive, reliable information “raises our comfort level in extending credit or making credit decisions,” he says.
Emma Gonzalez, controller at Pharr, TX-based London Fruit, Inc., also believes transparency, such as honesty in pricing and billing, can make for better business relationships. “If we have clarity between us, we will do more business.”
In today’s digital world, information is increasingly available. This puts pressure on businesses to be more transparent in their dealings with customers and suppliers. According to performance management firm Gallup, Inc., transparency in a business-to-business context means companies are honest with their business partners about their goals, their financial needs and requirements, and their level of experience in certain activities.
Transparency calls for making the information businesses need to make good decisions readily available, which in turn positions all parties for effective and efficient trade. Being comfortable in a “putting your cards on the table” mindset promotes openness, good communication, and builds trust and confidence between trading partners.
Demonstrating a willingness to be transparent gets a business relationship off on the right foot, giving it (in theory at least) a greater chance of blossoming into a long-term partnership—particularly valuable when buying and selling perishables.
How It Works To Charles Brown, director of credit at Ampco Distribution Services, LLC in Riverhead, NY, transparency means an expectation that the companies he deals with—buying from or selling to—will provide relevant and necessary information about their operations, including finances.
“We’re just looking for people who do what they say, when they say they’re going to do it,” Brown explains, and this is particularly appropriate when dealing with fresh fruit and vegetables. “In our business, we’re an unsecured creditor, which means a much higher level of risk. So it’s very important in the perishables industry to have high confidence in the partners you’re trading with,” he notes.
Ampco uses Blue Book Services, Inc.’s rating system, which reassures Brown that a trading partner is willing to be open about its purchases and sales, its financial information, and how it deals with various stakeholders. He also uses Blue Book information to look for patterns in how a company handles disputes and whether it is morally responsible, settling any disagreements and problems in an efficient and honorable manner. This way, he says, the company can avoid any “bad players” in the industry.
Though Brown is more comfortable dealing with public companies than private entities, closely held firms can build trust by sharing information with Blue Book Services and directly with Ampco. Supplying extensive, reliable information “raises our comfort level in extending credit or making credit decisions,” he says.
Emma Gonzalez, controller at Pharr, TX-based London Fruit, Inc., also believes transparency, such as honesty in pricing and billing, can make for better business relationships. “If we have clarity between us, we will do more business.”
Sharing financial and trade relationship information with various credit agencies is an important part of the buy-sell process and a way for companies to strengthen their business and credit profiles. Both suppliers and customers can then evaluate trading partners and have trust in the products or services offered.
It is also important to share accounts receivable and trade experience information, which contribute to and promote transparency. Of course, not all information may be made available—the level of transparency can vary depending on the nature of the relationship. London Fruit has a trial period with new customers, while Ampco’s transparency mirrors the level of economic exposure or financial risk.
Range of Benefits True business-to-business partnerships call for substantial transparency between organizations. If done right, it generates trust and becomes a win-win for both parties, enabling each to go about their business with solid support and a return on their relationship investment. A lack of openness, on the other hand, can lead to a denial of credit or require prepayment until financial stability can be proven and confidence earned.
Transparency extends to the loading and shipping of product as well. London Fruit shares real-time tracking information, so customers can follow a load’s progress, along with temperature readings during transport. This helps if any shipping issues arise, leading to higher quality assurance standards and fewer claims down the road. Suppliers can also log into London Fruit’s network to see how their product is selling.
A top benefit is food safety: in this instance, transparency and traceability go hand in hand, enabling partners to pinpoint problems within the supply chain. In worst-case scenarios, if a recall is necessary, shippers, receivers, and retailers can have current, reliable information at their fingertips.
With the latest Food Safety Modernization Act (FSMA) rules, there is more of an impetus to be transparent than ever before. The government and consumers are demanding a full complement of information from field to fork.
London Fruit requires business contacts to share third-party certificates and full audit results to better assess risk profiles. This also includes foreign suppliers, to ensure all imports meet both their own and FSMA’s more stringent protocols.
While this level of oversight calls for more involvement and monetary outlay—including sending personnel to visit foreign suppliers, Gonzalez stresses that London Fruit will do whatever is necessary to ensure food safety procedures are implemented and followed. Fortunately, the growers who supply the company with its mangos, limes, and avocados are already in compliance with handling practices and food safety rules, he reports.
To Be or Not to Be While being transparent undoubtedly has its benefits, and has become less of a choice in today’s digital environment, is there such a thing as being too transparent? And if a business is doing well, some would say, why not share various types of information—financial or otherwise—with the world? But what if a business is struggling and reluctant to share?
In the latter case, a lack of transparency is bound to create hurdles for trading partners, who may then seek the information elsewhere, or worse yet, decide not to do business at all. An unwillingness to share information may also cause rumors, which could then draw more attention to a company’s state of affairs—so it’s critically important to communicate with current and potential business partners.
If there’s a situation or problem and it is still manageable, trading partners should be informed with details about how the company is going to get back on track and what can be expected until then. By doing this, trust is retained; without it, overcoming the decision to be less than forthcoming may prove costly.
So even when a company’s management team feels it is not advantageous to share, it could end up exacerbating the situation through a lack of transparency. “Being too transparent can never be a problem, other than when you’re not doing good,” observes Gonzalez. “If you’re doing well, why not brag about it?” But if the reverse is true, she contends, “You have to be honest.”
Misspeaks & Missteps There are pitfalls to transparency: sharing certain types of data can give associates or competitors information they could use against a company, and the very process of openness itself requires the expenditure of both resources and time to stay compliant. Most would say these tradeoffs are well worth the price.
But what if a company slips up on the transparency front and becomes less communicative, leading to misunderstandings and alienating business partners? In this case, it’s imperative to remedy the situation. Take steps to mend bridges and share information, rather than allowing others to make assumptions. Maintaining a certain level of trust is better than none at all.
If the situation is serious, a business could utilize today’s digital environment to answer its critics and explain. Social media posts, website letters, emails, and parti-cipating in industry forums can help spread a company’s message and restore trust within the industry. And while these measures may help regain a certain level of transparency, it could still take time and result in a loss of business opportunities. This, once again, is why it’s so important to be vigilant about transparency, rather than looking to rebuild it after losing trust.
End Notes The information age has made it easy to share data with business partners and be transparent in dealings, rather than opaque and leaving business contacts in the dark. The nature of the fresh produce industry, in which goods have such a short lifespan, makes such openness necessary.
Since transparency is all about information, success is often intrinsically tied to openness and trust. Ampco’s Brown puts it this way: when a company’s management or credit department “doesn’t want to give us information, it raises a red flag… If I have a choice, I want transparency versus not, always.”
