Tesco shafted suppliers for their own profits
Last year, we reported on Tesco's unsavoury methods when it came to looking after their suppliers. We've talked about suppliers being too scared to complain about the supermarkets they're supplying, but that could all change with the news that Tesco have "seriously breached" a legally binding code which is there to protect producers, because they put a priority on their own finances over treating suppliers fairly.
This is according to a new report from the Groceries Code Adjudicator, who said that Tesco need to introduce "significant changes" thanks to these breaches.
Adjudicator, Christine Tacon, said: "The length of the delays, their widespread nature and the range of Tesco's unreasonable practices and behaviours towards suppliers concerned me. I was also troubled to see Tesco, at times, prioritising its own finances over treating suppliers fairly."
This investigation came up with the conclusion that the supermarket giant acted unreasonably when it decided to delay payments to their suppliers "for lengthy periods of time", and that breaches of this code were widespread.
It turned out that Tesco had delayed payment as a result of data input errors, as well as duplicating invoices, and making deductions so they could maintain their own profits. One supplier was owed a sum that was multi-millions, which Tesco took a couple of years to sort out, according to the report.
So, what's the punishment for Tesco? Well, they're now banned from deducting money owed for goods supplied. We would have liked to have seen them make an example of, with a big fine, but there you go. Either way, Tesco will now have to give suppliers 30 days to challenge any deductions, and they also have to sort out their pricing errors within seven days, fix their invoicing, and train staff in finance and buying concerning the findings in the report.
Tesco gaffer, Dave Lewis, responded to the report: "In 2014 we undertook our own review into certain historic practices, which were both unsustainable and harmful to our suppliers. We shared these practices with the adjudicator, and publicly apologised."
"Today, I would like to apologise again. We are sorry."
"Over the last year we have worked hard to make Tesco a very different company from the one described in the GCA report. The absolute focus on operating margin had damaging consequences for the business and our relationship with suppliers. This has now been fundamentally changed."