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Supply chain industry warns that retailers are giving procurement a bad name

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Large retailers and supermarkets received a stark warning from the supply chain industry this week, as new figures from the Chartered Institute of Procurement & Supply (CIPS) reveal that an overwhelming number (88%) 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.

Although supply chain professionals praised the retail industry’s speed at bringing new products to market (35% said it was the sector’s single most admirable quality), they raised serious concerns about its transparency. 44% of respondents said improvements to supply chain transparency and traceability should be the top priority for retailers looking to repair their reputations, whilst 86% said everyone involved in retail supply chains should have professional training and qualifications.

The figures reinforce earlier CIPS research showing that almost three quarters (72%) of British supply chain professionals have zero visibility of their supply chains beyond the second tier, with only 11% able to trace their entire supply chain.

Supply chain managers also shamed controversial ‘pay to stay’ charges as the worst ‘bullying tactic’ being used by retailers to squeeze suppliers. The charges, which force suppliers to pay unexpected fees just to continue supplying goods, were highlighted as the worst example of supply chain bullying by 49% of supply chain professionals. 35% of respondents, meanwhile, cited either long payment terms or late payment as the most serious examples of supply chain malpractice.

These practices have come under increasing scrutiny from regulators in recent months. The Groceries Code Adjudicator announced an investigation into Tesco for alleged delayed payments last month, whilst the Department for Business Innovation and Skills revealed it had asked the Competition and Markets Authority to investigate ‘pay to stay’ clauses in December.

David Noble, Group CEO, Chartered Institute of Procurement & Supply said:

“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.

Consumers want to know that the goods they are buying are procured in a fair and transparent manner. Hiding behind the defence of being “a buyer” rather than a procurer is an abdication of responsibility. Appropriate professional training is essential if we are to see the real step change we need in the industry.

Mean-spirited, opaque supplier charges are a blight on the UK’s economy. They impact the bottom line of small businesses, threaten job security and ultimately impact the quality of products on store shelves.”

Published on Tuesday 10 March by Veebs Sabharwal

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