Tuesday 21st Nov 2017 - Logistics Manager

Retailers are giving procurement a bad name

It’s not that unusual to hear stories about how some big retailers treat their suppliers – but it is unusual for a professional institute to come out and say that they are giving procurement a bad name.

Malory Davies FCILT, Editor.

Malory Davies FCILT, Editor.

But that is just what the Chartered Institute of Procurement and Supply has done. In fact, it has produced a survey showing that 88 per cent of supply chain managers think supplier bullying in the sector is giving procurement a bad name, with supply chain tractability singled out as a major area for improvement.

Not only that, 44 per cent of respondents said improvements to supply chain transparency and traceability should be the top priority for retailers looking to repair their reputations, while 86 per cent said everyone involved in retail supply chains should have professional training and qualifications. However, retail’s speed at bringing new products to market was praised – 35 per cent said it was the sector’s single most admirable quality.

‘Pay to stay’ charges were regarded as the worst tactic being used by retailers to squeeze suppliers, being highlighted by 49 per cent of supply chain professionals. And 35 per cent cited either long payment terms or late payment as the most serious examples of supply chain malpractice.

“Our members are unequivocal: the retail sector is not doing enough to clean up its act after years of scandals. It’s time the industry sat up and took notice,” said David Noble, group CEO, Chartered Institute of Procurement & Supply.

The big retailers have found themselves under increasing pressure in recent time with increased competition from the discounters eating into their market share, while the Groceries Code Adjudicator is investigating Tesco for alleged delayed payments, and the Competition and Markets Authority is to investigate ‘pay to stay’ clauses.

Will this lead to the abolition of such practices? When companies are working in an aggressively competitive market, they are under pressure to make use of any legal tactic to improve their competitive position.

What is clear, though, is that there is a strong desire for change among supply chain professionals. And that has got to count for something.