Spend Matters – 25th February 2020

We haven’t heard from 4C Associates in some time, but they look to have been busy with new hires and a new website. We’ll be catching up with business developments soon. But for now, Simon Latham, a senior manager with the procurement consultancy, shares his thoughts on The Grocery Supply Code of Practice (GSCOP), having worked at JS, Safeway and Tesco where he wrote Tesco’s GSCOP training material and trained over 3,000 people.

Now a decade old, The Grocery Supply Code of Practice (GSCOP) was created after the 2008 Competition Commission report highlighted the impact of major supermarkets on competition. It found that some of their practices were anti-competitive, transferring risk and costs onto the supplier. It applies to ‘Designated Retailers’ (i.e. the very large ones) and was intended to promote fair dealing between the large sellers and their suppliers, which can escalate claims of late payment, or payments for shelf positioning, etc., if they believe the supermarket to be in breach.

“The code has been around for over 10 years now and in this time it has proven strong correlation between receiving Grocery Code Adjudicator (GCA) focus and retailers improving performance,” he says.

Christine Tacon is the UK’s first Groceries Code Adjudicator and oversees the implementation of the GSCOP. “Christine and her team have orchestrated and delivered some fantastic results and achievements since the GCA’s conception,” he continues, “she ends the role at the end of June, and it is acknowledged by many how significant a job she has done to improve the commercial relationships between retailers and suppliers.”

“GSCOP’s overarching principle that should be applied in any day-to-day discussions, commercial arrangements or during any two-way dialogue between the buyer and the seller, is that you treat people how you yourself would want to be treated. This principle of ‘fair dealing,’ is not only the common thread throughout GSCOP, but it importantly sets the tone or environment under which any discussions should be carried out.

As a supplier, if you feel uncomfortable with how you are being treated in a discussion with a retailer, there is a possibility that the code is in some way being flaunted. Requests are often framed in a way that leaves little to the imagination if not fulfilled – if the consequence of not doing something is punitive, having a good working knowledge of GSCOP would be hugely advantageous and would help you find a palatable solution to the issue.

After 10 years, only 47% of direct suppliers have received training. The large companies continue to receive training, but micro, small and medium-sized companies are seeing a decline in the training sought – this is risky for those small companies potentially most at risk of a potential breach. Going forward, the GCA is recommending a more holistic company-wide approach to compliance that looks at improved communication, better systems and internal process, audit and legal compliance frameworks. The GCA aims to continue to work closely with retailers, but still relies heavily on suppliers advising of any potential areas of concern.

GSCOP does not give you black and white numbers and firm rules – every issue requires the need to agree and determine what ‘reasonable’ looks like. The key is its ability to bring parties together in a collaborative fashion to resolve issues amicably. GSCOP itself is split into 6 parts containing 17 rules. The 17 rules cover a broad spectrum of areas including common areas of tension such as delays in payments, costs for waste and shrink, acceptable payments for promotions and new lines, plus much more.

The scope of the CGA will undoubtedly continue to broaden – for example, last year saw the inclusion of B&M, Home Bargains and Ocado as designated retailers. Suppliers supplying the designated retailers, therefore, need to be familiar with the code and its 17 rules, plus the context and the overarching principles of it.”

In Tacon’s own words – “Get trained, know the code, speak up!”

Nancy Clinton