The GCA conference last week had all the usual themes: GSCOP drives huge improvement, fear of retribution has half of suppliers refusing to use it. But what was very different this year was that cost price increase (CPI) related issues dominated the conference. I’m glad that wasn’t ducked. It highlights again that CPI is a glaring omission from GSCOP – and that it needs amendment.
There was visible confusion over the role of GSCOP. I heard “GSCOP is about innovation” and “developing collaboration is why GSCOP exists”… hmm, not really. As per the definition on the government website, GSCOP sets out how designated retailers are expected to fairly manage their relationships with suppliers. It’s about fairness, and collaboration is not necessary for fairness. A fair fight is still a fight.
The trouble is, the fight isn’t fair on CPIs, which are not specified in GSCOP. GSCOP interferes already with negotiations on listing, delisting, promotions, payment terms, wastage, shrinkage, position on shelf and supply chain procedures. All of these were negotiable before, and they still are now. So why not include CPIs too?
I don’t want to make negotiation easier for naive suppliers, as the consumer would lose out. But GSCOP says the treatment of suppliers must be fair. And how can you even have a fair negotiation when a retailer can tread on a supplier like an ant without even knowing they’ve done it?
Retailers always claim they prioritise supplier relationships. They say “without our supplier partners we wouldn’t have a business” and “we don’t want to just follow the letter of the code if it leaves our suppliers unhappy”. Sweet Jesus.
What they mean is, they don’t want to put suppliers out of business. The ideal supplier appears to be one that is just above the survival line. Any form of shareholder value is there to be attacked. As they see it, that’s still fair, still in the spirit of the code, still negotiation.
Banging on about collaboration is not an answer in short-term tough times. Retailers give only lip service to the seven golden rules they have all declared as best practice.
Both sides struggle today to make profit. But retailers have control of their sell price as well as their costs, while suppliers believe they have control over neither. They do, of course – they just lack the knowhow on CPI. If we believe retailer delays specifically are unfair, these can be addressed.
Retailers should stop demanding more information so they can decide how justifiable a CPI is. That’s not their role. Retailers have no right to know the pressures on an individual supplier. They should assume the new price is justified based on their market intelligence, and follow the code while telling the supplier if they still want it within 30 days. Instead, they are pretending their analysts are better than the ones in suppliers, who are taking all the risks.
There will always be disputes when the negotiation fairness is fundamentally not there. Axe the adjudicator? Surely our government would not make a glaring error on that scale!