The Co-op has sent a full apology to its suppliers following the publication of the report by the Groceries Code Adjudicator (GCA) into certain historic supply practices at the Co-op.
The GCA report found that the Co-op had contravened the Groceries Supply Code of Practice in relation to delisting and variation of supply agreements without reasonable notice. The latter point specifically looked at the introduction of benchmarking and depot quality control charges by the Co-op.
The Co-op has taken decisive steps to ensure it treats suppliers fairly, including providing refunds to those wrongly impacted by the introduction of charges and retraining over 1,000 colleagues to embed a culture of Code compliance in line with its spirit and requirements. It welcomed that the GCA found that the Co-op had not been, “malicious,” or acted in a way, “intended to result in gain.”
Jo Whitfield, Co-op’s Food Chief Executive Officer, who has today written to all Co-op suppliers to apologise and detail the business’ next steps, said, “We are sorry. We’ve gone to great lengths to put these things right and have undertaken a root and branch review of all our supplier dealings.
“We were focussed on rescuing the Co-op and doing right by consumers but we should have also given more thought to the potential impact those planned changes would have on our suppliers. It is clear we tried to move more quickly than our systems, processes and people could handle.
“We co-operated fully with the GCA during the investigation and have worked hard to fix things as quickly as possible, including refunding over £650,000 to suppliers.”
The Co-op has undertaken major changes to its governance processes and improved its systems. This followed a wide-ranging root and branch review of all supplier dealings, including an independent review of depot processes, which was launched once matters were raised with the business.
To transform ways of working it has unveiled a new supplier charter and:
• Created a new, simpler charging process, removing some charges and reducing others.
• Introduced new policies and processes to ensure reasonable notice periods are given, supply agreements are recorded consistently, disputes are settled swiftly, and discrepancies are dealt with smoothly.
• Launched a dedicated financial helpline for suppliers to raise any queries.
• Trained suppliers on Co-op systems.
Before the GCA investigation started, the Co-op moved swiftly to:
• Refund payments where a supplier was charged for benchmarking and quality control – £500,000 before the investigation and a further £150,000 during the investigation.
• Introduce a new delisting process to manage de-lists and reductions in demand consistently and fairly in accordance with the Code.
• Review Groceries Supply Code of Practice training for colleagues and retrain those dealing with suppliers.
• Overhaul supplier relationships to:
- Appoint a Director of Supplier Relationships supported by a dedicated team
- Survey all suppliers for feedback on their dealings with the Co-op.
- Relaunch supplier listening groups to improve communication, share ideas and address challenges.
And Co-op will continue to:
• Work closely with the GCA over the next few months to implement, review and audit Co-op’s action plan in response to the findings.
• Improve IT systems to make the Co-op transparent, consistent and easy to do business with.