Retailer watchdog will go without supplier support

By Rick Pendrous contact

- Last updated on GMT

Related tags: Supermarket, Money

Tacon: Unless suppliers support me, I will go
Tacon: Unless suppliers support me, I will go
Groceries Code Adjudicator (GCA) Christine Tacon has criticised food and drink suppliers for failing to complain about supermarket abuses of power, warning her office was threatened unless they were more forthcoming.

Speaking to Provision Trade Federation members in London yesterday (July 1), Tacon said she could only tackle complaints raised by a number of companies to ensure individuals could not be identified, since she had a legal duty to safeguard anonymity to prevent firms from reprisals.

She warned that unless suppliers spoke out, the problems would only get worse as supermarkets met increasing need to cut costs through measures such as “range rationalisation” ​to counter the inexorable rise of the hard discounters.

‘Pitiful’ survey response

Tacon expressed disappointment that only 574 responses (just under 400 from direct suppliers) had been received to a GCA YouGov poll covering her enforcement of the Groceries Supply Code of Practice (GSCOP). She described the level of response to the survey – released with her first annual report last month – as “pitiful”, ​particularly given there were about 10,000 direct suppliers, she added.

“I can only respond to things people tell me about,”​ said Tacon. She used the example of demands for lump sum payments, which she claimed were widespread and yet suppliers were not prepared to complain about. “Please tell me if something is going on at the moment, because I can stop it instantly … if I get enough people to complain I can get your money back. So you’ve actually got to work together to make this happen.”

Tacon added: “If you don’t help me and tell me what is going on, not only can I not help your individual situations, but my office will be closed down … I’ve got to demonstrate that I am making a difference.”​ She also asked for positive feedback about what her office was achieving: “If you don’t pat me on the back, I’m going to give up too.”

Priorities for action

The five top problems areas* for suppliers emanated from the UK’s supply chain being far more complicated than it needed to be, Tacon claimed, and this is where she was focusing her attention.

As competition in the sector rose, retailers were trying to find any way they could of squeezing more money out of the supply chain, she said. This included sometimes dictating to suppliers which packaging or hauliers they had to use. One of the biggest problem areas was around ‘forensic auditing’ by retailers, said Tacon, in which she had achieved some success recently​.

‘Drop and drive’

Another key area of contention related to so-called “drop and drive”,​ in which supermarkets deduct money from invoices for deliveries they claimed fell short of what was ordered. Tacon is currently working with a third-party chilled chain logistics provider to identify where these discrepancies arise and she hopes to have the results by November. If the findings were not acceptable, she would consider undertaking a formal investigation in this area.

Other areas of concern included: supermarkets making ‘requests’ from their suppliers for payment for a particular supermarket shelf positions – which are allowed – when they were in effect ‘requirements’ – which are in breach of the GSCOP; demands for payments for not achieving service levels where these had not been agreed; demands for compensation from suppliers when retailers get their forecasts wrong; and demands for money up front to be considered for multi-channel initiatives.

“We seem to have embedded loads of practices which have made it more complex,”​ said Tacon. “My concern is that there are a whole load of practices we have embedded into how we do business, which are actually either outright breaches of the code or potential breaches of the code.”

*Tacon’s Top five priorities for action:

  1. Delivery performance
  2. Forecasting and service levels
  3. Requests for lump sum payments
  4. Packaging and design charges
  5. Forensic auditing

Related topics: Services, Legal

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