Many of the Bad Buying stories featured here or in my book have an element of levity to them. Some are decidedly humorous even. But sometimes there is a case where it is impossible to feel anything other than horror, anger and amazement at the behaviour of the parties involved.

The case of the Post Office, their postmasters and the Fujitsu Horizon IT system is a case in point. Last month,  39 people had their criminal convictions quashed in the High Court, the latest in a series of legal cases which have finally ended up clearing these individuals and exposing the appalling actions of Fujitsu and the Post Office.

Without going through all the details, the Horizon system appeared to show discrepancies in the finances of Post Office branches. That was blamed on the people running those branches – they were accused of stealing money or at best mismanaging post office funds. Many of those accused dipped into their own pockets to make up the supposed shortfalls. Eventually, the Post Office prosecuted hundreds of post office managers for theft – many went to prison. Some were ostracised by friends and neighbours; at least one committed suicide.

And all the way through this the Post Office and Fujitsu insisted that the Horizon system could not be wrong.  But eventually, after investigations and court actions, it became clear that the system was flawed and could well make the errors that led to the numbers not adding up. Even then the Post Office keep fighting for years, putting the postmasters through more pain.

There is a chapter in my book which is all about “believing the supplier”, and how Bad Buying can result from exactly that. That seems to have been one problem here. The Post Office initially at least believed Fujitsu when the supplier said the system was foolproof. No doubt there were careers and sales bonuses on the line for senior Fujitsu staff. Then when the integrity of the technology was called into doubt, we saw greed, fear, arrogance and stupidity from Post Office management, who refused to admit they might have been wrong. Instead, they continued to harass and prosecute innocent people, failing to take responsibility until the very end. 

So Bad Buying on the Post Office side, a poor product from Fujitsu and morally bankrupt behaviour from many of those involved on both sides of the supplier/buyer relationship. Fujitsu witnesses were also made to look stupid in court as they defended their system. Indeed, as Computer Weekly reported, after a 2019 hearing, “The Director of Public Prosecutions (DPP) has referred information to the police relating to a High Court Judge’s concerns about the accuracy of evidence given by Fujitsu staff in criminal trials”.

The least the firm – along with the Post Office itself – can do now is offer a large sum of money to compensate those affected. (Fujitsu has continued to win huge government contracts, by the way). There may be charges of “malicious prosecutions” to be brought against Post Office executives too.

Well done to Alan Bates, the postmaster who initially took on the Post Office,  Computer Weekly and Tony Collins, the first to pursue the technology aspect of the story, and to Private Eye magazine which regularly investigated and reported on the whole affair over the years. It’s a lot more than simply bad buying and the story of another dodgy IT system of course – and it all adds up to one of the most distressing stories about corporate behaviour that I’ve heard in a long time.

(Picture courtesy of my phone and a very old carrot from the back of the fridge)

Let’s have a rest today from pandemic related buying failures, (potential) frauds and so on, and look at something more heart-warming.

Advertising is a fascinating field when it comes to bad – or good – buying. That’s because of the multiplier effect. It is one of those spend categories where the impact of the spend can be out of all proportion to the amount of money actually paid out. That can be either a positive or negative impact, it is important to say.

So if I am buying cleaning services, or packaging, or raw materials, then as long as there isn’t a major fraud (contaminated material, perhaps) probably the worst that can happen is we “lose” the value of the expenditure.  The packaging doesn’t work on our production line, or the cleaning service is hopeless. Even then, I may well be able to recover something from the supplier. But if I spend a million on a brilliant advertising campaign, that spend could generate tens or even hundreds of millions of “brand value” in terms of future sales and profit. And if I make a lousy buying decision, we might lose similarly large amounts of value.  

There’s a great seasonal example right now with supermarket group Aldi and their “Kevin the Carrot” campaign, which first was aired in 2016, five Christmases ago.  I don’t know how much Aldi paid for the creative genius behind Kevin, but it was money very well spent. Aldi now receive millions of pounds worth of free advertising as the media highlights the adventures of Kevin without the firm paying a penny for much of the coverage.

There is even a range of Kevin-related soft toys, and demand is so great that “to help reduce crowds in the current climate, this year Aldi has introduced a digital queuing software that’s also used by music festival Glastonbury”, according to Wales Online’s coverage of Kevin!

But we might imagine the first meeting when the agency pitched this to the Aldi marketeers… “ a talking carrot? Are you sure? I mean, carrots aren’t even very Christmassy really”? 

“Yeah, but a cute talking turkey might not work…”

Anyway, marketing and advertising can go the other way too. Remember the backlash in 2017 when the Pepsi ad with Kendall Jenner seemed to suggest that public demonstrations would all turn into happy, cheerful love-ins if Kendall just shared some Pepsi around the police and the protesters? That was withdrawn and although Pepsi got free publicity too, just like Aldi, it wasn’t quite as positive.

There’s an older example in my Bad Buying book, with the case of Schlitz Beer. It’s a multi-part story really, because the firm’s problems started with a sequence of recipe changes to the beer, which didn’t go well in terms of customer reaction. With sales falling rapidly, a new advertising campaign was the answer.

Unfortunately, the creative contribution was the opposite of the inspired talking carrot, as Schlitz used a boxer who got upset when someone offered him a beer that wasn’t Schlitz. His anger at this proposal was not very appealing however, and it went down in history as the “drink Schlitz or I’ll kill you” campaign!  The firm was eventually bought at a knock-down price by a competitor, as sales continued to slide.

That was an example of advertising spend having that negative multiplier I described earlier and I’m sure we can all think of ads that made us feel less rather than more inclined to buy a product. But in the meantime, enjoy Kevin, and I’ll see you in the queue for the Giant Kevin the Carrot Plush Toy! (too late, sold out already…)

We should give Boohoo credit for commissioning an independent report from a top legal expert, Alison Levitt QC, to look into the Leicester “sweat shop” scandal.  Earlier this year, the Sunday Times exposed multiple factories that were paying staff well under the statutory minimum wage as well as raising issues around workers’ health and safety during the pandemic. Boohoo was perhaps the highest profile of the retailers that sold  garments made in these factories.

But the report makes uncomfortable reading for the Boohoo board and investors. The very first paragraph is striking. “One of the aspects that I have observed is a tendency by the Boohoo board to treat every piece of negative publicity about the Leicester garment industry as though it was the first time they had ever heard it.”

But the firm knew about issues months (at least) before the story broke.  One auditor told the Board that the conditions in one factory were amongst the worst they had seen in the UK. Levitt says that there was no intenional exploitation by the firm, but rather that “governance” and processes were weak. Fundamentally, Boohoo felt no responsibility for the conditions in their suppliers’ factories. It was also unimpressive to see John Lyttle, the CEO, didn’t mention a trip he had made to “appalling ”factories when he was interviewed by Levitt. That only came out when she talked to others, which made Lyttle look somewhat devious or maybe just very forgetful …  

There is an interesting philosophical dilemma here of course. When I was a CPO in large organisations, I would have objected if you told me I had to take responsibility for every worker in every one of the thousands of firms and facilities that supplied NatWest or the Department of Social Security. So there is a question of scale and dependence here. But we have seen how the leading firms in the procurement with purpose movement (read our “Procurement with Purpose” interview with Unilever here, for instance) do step up when it comes to their major suppliers. They also look to intervene positively when important supply chains contain major sustainability-type risks and issues, whether they are environmental or social.

So suppliers of the clothes that are the main engine of Boohoo’s business should be defined as pretty strategic and worthy of more diligent supplier management from the firm than we saw in these cases. Boohoo has now accepted the review’s recommendations in full and apologised for failing to “match up to the high expectations we set for ourselves”.  The CEO also said the company would be a “leader for positive change in the city”, and promised to go further and faster to improve our governance, oversight and compliance.”

What about the business impact of all this on Boohoo? Well, the initial scandal certainly did have a negative impact, as the share price crashed by some 50%. But it is interesting to see that it is now back almost where it started, within 5% of so of pre-scandal level.  Does that suggest the group that is the main customer base for the firm – young females – has a short memory? Or do they think Boohoo has apologised and will take action, so everything is OK?   

Some of those customers are undoubtedly very committed to serious campaigning on purpose-related issues, from climate change to diversity. But (and sorry to sound like an old cynic here), it seems like many are happy to jump on a Twitter or Instagram controversy about transgender rights or veganism and express an instant virtue-signalling opinion, rather than do something more demanding and difficult – such as changing their buying behaviour and checking out the provenance of the clothes they buy.