Importance of the Grocery Code Adjudicator (GCA) highlighted recently
The relevance and value of an independent body to oversee the operation of the grocery supply chain has been highlighted recently, with the announcement by the Grocery Code Adjudicator (GCA) that the largest customer for UK produce had been knowingly delaying paying money to suppliers in order to improve its own financial position.
The customer seriously breached the legally binding code governing the grocery market and systematically delayed payments owed to food and drink companies, in some cases by more than two years, to artificially inflate its margins.
The adjudicator launched the investigation in February last year and the 60-page report covered the period from 25 June 2013 to 5 February 2015. This also led to a Serious Fraud Office investigation.
The GCA concluded that the supermarket had knowingly obstructed payment to suppliers. It found that its buying teams had admitted to “tactically making it difficult” for suppliers in order to secure more funding from them.
This case underlines the importance of the GCA and the role it plays in seeking to change the culture across the multiple retail sector and secure a more equitable trading environment for the remainder of the supply chain.
The statement from Tesco’s chief executive, Dave Lewis, acknowledging that the absolute focus on operating margin had damaging consequences for the business and its relationship with suppliers and that things have now been fundamentally changed, is to be welcomed.
Let’s hope that this landmark case marks a significant change for the better in the multiple retailer - supplier relationship. In the current deflationary climate where margins are tight we need to work together to meet the all-important customer expectations.