Supplier fines in the spotlight

A supplier to the major multiples, including Tesco, Asda, Morrisons and the Co-op, who wished to remain anonymous, complained of “charges for reported faults that appear to be blown out of proportion as a profit-making exercise”​ and were against the spirit of the Groceries Supply Code of Practice (GSCoP).

The supplier also cited large charges imposed on suppliers by a number of retailers to compensate for product withdrawals and product recalls that he argued were not justified by the extent of the recalls.

It is an issue that has been identified by the Groceries Code Adjudicator (GCA) Christine Tacon, even though it doesn’t fall strictly within the scope of the GSCoP.

In response to the accusations, a spokesman for Morrisons said: “Product recalls involve real food safety issues that do lead to costs and we attribute these fairly back to the supplier.​

‘Involve real food safety issues’​

“With other costs we listen to our suppliers, including through a confidential survey, and if they have specific issues we are happy to talk and respond wherever possible.”​

A spokeswoman for the GCA said: “We do not have enough information to say whether the issues raised with Food Manufacture are covered by the​ [GSCoP], but the GCA office is always happy to discuss issues in confidence with suppliers.”​

However, she urged suppliers to raise any concerns with supermarket code compliance officers (CCOs) – whose role is separate from the buying function – if they were unhappy about charges imposed.

She added: “On the issue of recalls … the GCA is aware of instances where suppliers have successfully challenged, through the CCOs, the reasonableness of charges that were provided for in the supply agreement.​

“These are often very high fixed sums to act as a deterrent and may be out of proportion to the actual costs to the retailer where only a few cases of groceries are involved.”​

Charges for losses​

The supplier cited charges for losses claimed by the Co-op and Asda for inspection time and administration costs associated with product rejections, that he claimed were disproportionate to the size of the problems identified. “Minor flaws with no impact to consumers appear to be searched for in order to make charges,”​ he suggested.

An Asda spokesman said: “We work hard to have positive relationships with our suppliers and work with them to resolve any concerns or issues. ​

“We have a dedicated GSCoP CCO who suppliers are encouraged to flag concerns with, and whose role is to resolve them in line with the Code.”​

The Co-op had not responded to requests from Food Manufacture​ for comment on these complaints at the time of going to press.

The supplier was also critical of Tesco for charging £620 an incident for barcode non-compliance – a figure confirmed by Tesco – when the quality of print was below that specified. The source claimed that these charges were imposed even when barcodes could still be read by apps on smartphones.

Standards body for barcodes​

However, Gary Lynch, chief executive at GS1 UK – the standards body for barcodes – disputed the suitability of using smart phones for verification scanning of barcodes.

“The standards create a single, agreed way of barcoding products for both suppliers and retailers, which means that the flow of products is more efficient, less complex and also designed to be less costly,”​ said Lynch.

“Mobile phone scanners do not have the functionality​ [of ISO compliant barcode scanners used in the retail environment] and so if suppliers are using these to perform checks then this could lead to fines and failures if the barcodes fall short of the agreed standards.”​

In response to the complaint, a Tesco spokesman said: “Correctly labelled deliveries are essential to the efficient running of our distribution network, and taking delivery of goods without a scannable barcode leads to extra workload and costs.​

“For this reason, we ask all suppliers to label deliveries with an industry-standard barcode. The charge for incorrectly labelling a delivery is clearly communicated to all our suppliers in advance and is only in place to cover our costs.”​