Sainsbury wrote to all its non-food suppliers on September 13 to announce that their standard 30-day payment times would be increasing to 75 days.
FPB’s policy adviser Robert Downs told FoodManufacture.co.uk: “Sainsbury knows the Groceries Code Adjudicator is coming in and they’d have a job getting the extension past them for their food suppliers. The adjudicator is being put in place to protect small suppliers against such bullying behaviour.”
When asked to comment on the FPB’s charges of supplier ‘bullying’, a spokesman from Sainsbury told FoodManufacture.co.uk: “Sainsbury is proud of the long-term relationships we have with many of our suppliers. We support the Groceries Supply Code of Practice and we have pledged to act in good faith to all our suppliers.
“Beyond this, we operate a Trading Finance Platform that allows our suppliers to receive early payment of invoices and we also enable suppliers to benefit from a discounted rate linked to our cost of borrowing, something particularly useful for smaller suppliers.”
The FPB has now entered Sainsbury in its Hall of Shame to join the likes of Dell, Argos and Carlsberg, which have all previously increased their supplier payment times.
Sainsbury’s ‘unethical’ behaviour
“Sainsbury might like to promote itself as the ethical supermarket but when it comes to its treatment of suppliers, it’s anything but,” said Downs.
“No right person could justify what Sainsbury is proposing – a 150% increase in the time it takes them to pay a supplier for goods provided – as being fair and decent.
“With startling arrogance they have tried to justify this increase by claiming 75 days is the industry standard. This is utter fabrication.”
A spokesman for Sainsbury said: “We have written to our [non food] suppliers about our intention to bring their payment terms more in line with the rest of the industry.
“This will be followed up individually with any suppliers experiencing difficulties in meeting this change. We are fully committed to ensuring all payments to our suppliers are made on time.”
The FPB has written to the supermarket asking it to sign the government’s Prompt Payment Code, which is a pledge to pay suppliers on time and not to change terms and conditions mid-way through a contract.
“In fairness to Tesco, it signed up to the Prompt Payment Code, but Sainsbury refused to sign when we asked them,” said Downs. “They obviously knew this announcement was coming.
Jobs will be lost
“There’s no consultation process, they’re just telling suppliers this is happening – like it or lump it. It’s dictatorial stuff and the supermarket is acting like a bully.”
Downs called for an adjudicator to police supermarkets across the board – not just to protect food and drink manufacturers.
“What’s the point of having a watchdog just for the food end of the market?” he said. “All suppliers need to be protected from bullying supermarkets.”
Research carried out by payment firm Bacs has shown around £37bn is owed to small firms in unpaid invoices in the UK at any one time, with slow payment a major headache for the supply chain.
Downs said: “This kind of borrowing from suppliers – whatever their size – is scandalous, particularly from a profitable FTSE 100 company like Sainsbury, which is in no way financially challenged, but clearly just greedy.
“It could cost jobs because they’re effectively asking the suppliers to lend them money.”