Licensing Rules Proposed To Fight Grocery Supplier Mistreatment

The U.K.’s small suppliers have been struggling for years with late payments, but the supermarket sector has been particularly susceptible to supplier mistreatment. Earlier this month grocery chain Tesco reported in its quarterly earnings that an internal investigation found likely mistreatment of its suppliers in breach of the Grocery Supply Code of Practice.

Premier Foods has also come under fire by regulators for mishandling supplier contracts, and according to data from the last year, both Tesco and Morrisons have received 18 complaints from their suppliers containing claims related to the GSCOP.

While U.K. officials have taken an array of measures to combat the matter, including implementing a self-reporting Prompt Payment Code and launching probes, critics say the government has not adequately addressed the issue.

Now, the Chartered Institute of Procurement and Supply is said to be proposing a new requirement for major supermarket procurement officials and buyers to become licensed to legally work with suppliers. Officials that breach supplier conduct rules would have their licenses taken away, reports said.

CIPS chief executive David Noble told reporters that the program would be a form of “self regulation,” and that the group has already been in discussions with authorities to discuss implementing the system.

The proposal follows the release of new research by CIPS, which found that just 11 percent of U.K. companies have a close relationship with their suppliers throughout the entire supply chain. Meanwhile, 72 percent of businesses admitted that they cannot be sure whether there is malpractice going on in the supply chain or not.

“My argument is that this isn’t much cost,” Noble said to promote the licensing rules. “Clearly there is an investment in time and money. But frankly I would want to do this, because the risks are so great, the PR could be so bad. Another disaster could be around the corner.”

Reports said Noble is pressing for a training program that would require employees to meet specifications if they wish to secure a license to work with suppliers. “I think the profession has to be regulated,” the CIPS chief executive added. “You can’t keep on having a profession where anybody can do it and be responsible for these things, without any other measurements other than cost saving.”