New supermarket code for suppliers

A new code of practice to ensure commitment to good, long-term relationships between UK retailers and suppliers came into force last week.

The strengthened and extended Grocery Supplier Code of Practice applies to the 10 biggest grocery retailers.

The amended code, which now gives suppliers access to independent binding arbitration for the first time ever, will apply to the 10 retailers with a combined grocery turnover of more than £1 billion a year.

Rules set out by the code dictate that it will:

•    Be regulated by the OFT

•    Give any supplier the right to apply to have an independent arbitrator appointed under the Chartered Institute of Arbitrators’ Rules to look into their case, with the initial costs being met by the retailer.

•    Protect suppliers from being asked for unexpected retrospective payments or being asked to cover the costs of shrinkage (theft).

•    Require much more detail to be confirmed in writing increasing certainty on both sides.

•    Require all retailers included to have a compliance officer directly responsible for the Code and reporting to the OFT. A retailer in breach faces a fine under the Enterprise Act.

The strengthened and more extensive code, which replaces the one created in 2002 (and at the time only applied to Britain’s four biggest supermarkets), has been welcomed by the British Retail Consortium.

Director general of the BRC, Stephen Robertson said: “The effort and money retailers are putting into demonstrating they meet the code’s requirements shows they accept their responsibilities as major players in the supply chain.

"The code gives suppliers more protection, it will strengthen relationships and give suppliers the confidence they need to plan for the future.”  

Jane Parkinson, 08.02.10