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7 key points suppliers need to know about GSCOP

You may have heard about GSCOP, you may even know a little about it. You really need to know these 7 key points about GSCOP because they represent the 'rules of the game' you are playing in. Without knowing the rules, you could get fouled and not even know it.

An account manager starts an induction at his or her new company. On the list is Health & Safety. How to bend your knees when you are lifting a box – I’m not making fun of Health and Safety. I am saying that if we were to rank the usefulness for a NAM of knowing how to lift a box versus legislation for how supermarkets and suppliers should work together, it's a no-brainer!

1. GSCOP is only half of the truth

In the world of UK supermarkets and their suppliers 'GSCOP' has become a familiar term. Industry jargon, as it were. Yet GSCOP represents only half of the truth because GSCOP is a set of rules that the UK major supermarkets should adhere to, but the entire rulebook is the Order – ‘The Groceries (Supply Chain Practices) Market Investigation Order’. The Order is 19 pages and GSCOP represents only 7 pages. We are referencing only a third of the rules when we say 'GSCOP'.

2. It's serious!

The very potted history to the arrival of the Code goes back to 2001 when the Competition Commission conducted an investigation into the Groceries Market and then latterly launched the ‘Supermarket Code of Practice’. Roll forward 12 years and Parliament has appointed an enforcer. The ‘Groceries Code Adjudicator’ (GCA) was put in position after a Bill was passed. Christine Tacon is the first GCA and has the power to fine the major UK supermarkets up to 1% of their annual turnover, not just their grocery turnover. For Tesco this could mean a fine of £690 million!

3. Iceland has the worst compliance

By law the major UK supermarkets must submit an annual report to the Office of Fair Trading declaring their compliance. The 2015 Annual Update presented by the GCA shows how each supermarket compares. Iceland has the worst compliance and does not comply nearly 1 in 3 times. The most surprising is the Co-op showing a rare/never compliance of 1 in 4 times. Not great for a supermarket that purports to be ‘responsible’.

4. The written supply agreement is where it all starts

The Code states that, ‘A designated retailer must ensure that all the terms of any agreement with a supplier for the supply of groceries for the purpose of resale in the UK are recorded in writing…’. The 2015 update from the GCA reported that only 40% of suppliers had a written supply agreement. The Challenge for every supplier is to use his or her negotiation training to have a written supply agreement in place. The Order will have deemed this important because so many ‘agreements’ between suppliers and supermarkets are made verbally, across a number of meetings & conversations, without being absolutely clear on what has been agreed. The principle for a better relationship is clarity.

5. What's covered by the order?

UK supermarkets with a turnover of more than £1 billion must comply. These are named within the Order. Groceries are covered by the Order, but products such as petrol, clothing and plants & flowers are not covered. Direct suppliers are covered by the Order, but indirect suppliers are not. There is some debate and call for indirect suppliers to be covered because of the ‘further up’ members of the supply chain now pushing the problems further down the chain. So, instead of solving the problem, just moving the problem onto someone else.

6. Buyers are trained – this is the law

Supermarket buyers have to be trained in the Code. There is no requirement for suppliers to be trained. The result is that 76% of suppliers have a ‘fair to no’ awareness of the Code. Account Managers would benefit from understanding the Code because they at least need to know when a possible breach is being made, and more importantly, what they can do to adhere to the principles of trading responsibly, e.g. Proposing a written supply agreement.

7. Both parties should know the rules of the game

There are 1-day training courses available for £500+vat from some training providers. Instead of spending a day being trained in something that is not a skill to be learnt, but legislation to be aware of, here is a cheaper alternative – A GSCOP eBook, ‘A Complete Understanding of the Groceries Supply Code of Practice (GSCOP)’. You can pre-register for the GSCOP eBook.

Making Business Matter is a training provider to the UK grocery industry specialising in suppliers to the big four supermarkets. Their clients want to secure more profitable wins using better 'soft skills'. The reason they choose MBM is because of their combination of relevant experience and unique people development training method we call 'Sticky Learning'.

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