Food service giant Brakes Group is demanding that suppliers pay to use its online purchasing and supply management system, or lose contact with company buyers.
Based in Ashford, Brakes turns over £2.6bn and markets its isupply! platform on its website thus:“Buy this amazing tool today for only £1,500 ... that's less than £30 a week!"
But FoodManufacture.co.uk understands that suppliers will have to pay for the system if they wish to supply Brakes after the end of July, as it will become the only means of interacting with the company’s ordering teams.
One disgruntled supplier, who wished to remain anonymous, said: “They have imposed a compulsory charge of at least £1,500 per annum on all their suppliers, which they have then deducted from their payments.
“As of 31/07/11 there will be no other way of receiving orders from Brakes. Our buyer is currently ignoring me.”
Acceptable business practice?
FoodManufacture.co.uk asked Brakes whether it considered the fee demand an acceptable business practice, given the supplier’s belief that, “if Brakes were a large UK retailer, this behaviour would breach the Groceries Supply Code of Practice (GSCOP) guidelines”.
Brakes confirmed in a statement, which included the heading "how we should respond/justify this", that all suppliers had “been requested to move on to the new system by July 31”.
It added: “An annual licensing fee has been requested from each supplier in order that they can share the benefits of the system. This approach to sharing information and increasing efficiencies is very common in other areas of the food industry.”
But supply chain consultant Hugh Williams, md of Hughenden Consulting said: "I suspect it's a growing trend but I'm not sure it's that common. There is obviously a move towards technology that links suppliers to customers and so forth."
Williams added that within food manufacturing such practices were often driven by the retailers, who pushed the cost of such systems further down the supply chain, selling them upon this basis: "If we win, then, hopefully, you'll win!"
Another supply chain consultant said: "I haven't experienced this sort of thing before, and we work many food manufacturers, albeit more those supplying on the retail side."
The Brakes statement also outlined the advantages of isupply!, which it said “has been developed to support suppliers with internal efficiencies”.
Brakes said it enabled the company and its suppliers to share information, process orders, resolve invoice queries and plan business operations.
“isupply! will reduce suppliers’ internal order and invoice administration - meaning fewer man hours will be needed,” the statement said.
"The system will speed up the order and invoicing process - to improve supplier cash flow. In addition isupply! allows for more accurate supplier forecasting - to improve business planning, efficiencies and reduce waste.”
Brakes produces and distributes fresh and frozen food, including fruits and vegetables, chilled and frozen meat and poultry products and bakery food.
It is a leading supplier to pubs, restaurants, hotels, schools, hospitals, contract caterers and other foodservice customers in the UK, Ireland, France and Sweden.