Supplier abuse

Tesco has been roundly criticised by the Grocery Code Adjudicator over its treatment of suppliers. The adjudicator investigated “the length of time taken to pay money due to suppliers, unilateral deductions from suppliers and an intentional delay in paying suppliers”. The findings leave no doubt that Tesco was engaged in substantial supplier abuse. In fairness it has to be said that, miraculously, Tesco is now ‘a very different company’ from the one described by the adjudicator, according to its CEO.

Yet the real issue is not just Tesco’s practices, but those of all the supermarkets.  I doubt that Tesco is unusual, it is just that since its wider financial malpractices were exposed, it became an easy target. The problem is that there are so few supermarkets that it is no wonder that they exploit their suppliers. And given the opportunities for suppliers to find new customers is so limited, it is understandable that they make few complaints.

But the problem goes even wider than this. While supermarkets may be repeat offenders in terms of supplier abuse, many large companies also work hard to maximise cashflow at the expense of suppliers. Very lengthy payment periods built into contracts are commonplace.

Who is going to bite the hand that feeds them when there are so few hands to go round?

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