KamLibrary - GSCOP-Adjudicator

News that the government is planning the introduction of the role of Adjudicator to help implement GSCOP is encouraging. Given that the new government has many priorities and a limited time before the coalition begins to unravel, it is good to feel that GSCOP is so high on their action-list.

Although the appointment of an Adjudicator rather than a full-blown Ombudsman seems like a compromise it is in practice a role more appropriate to GSCOP, and indicates a serious will on the part of the new government to implement the new code… However, as new primary legislation will have to be put in place, this means that it could be mid-2011 before the role is actually filled.

Bearing in mind that any delay will be of benefit to retailers, allowing them to establish new ‘precedents’ in their trading relationships with suppliers, such delays will weaken suppliers’ positions unless they use the time to establish a GSCOP policy, quantify the financial impact of all terms and conditions, and begin appropriate negotiations with the 10 designated retailers.

Hopefully, most people appreciate that going to law has to be a final step and should be seen as a way of attempting to dissolve a trading relationship equitably, rather than providing a basis for business development with a trusted trade partner.

We believe that this appointment and the retention of the secrecy condition represents a breakthrough in supplier-retailer relationships and will serve to expose any retailer-abuse to open-market scrutiny. This will help in moving from an obsession with proving a case in law, correct to three places of decimals, and move instead to the ‘court-of-commonsense’ where most of us have to live, a place where 100 suppliers complaining in secret about the same retailer breaking the code in the same way, will probably indicate a breach in the spirit, if not the letter of GSCOP.

If, on the other hand, the trading relationships are really as above reproach as retailers claim, then 12 months secret access to the Adjudicator’s open door will serve to prove that GSCOP has been an unnecessary waste of time…

Meanwhile, the real issue for suppliers has to be the extent to which GSCOP is currently more than a piece of dormant legislation. In other words, are any suppliers or retailers taking steps to implement the ‘new’ Code of Practice?

For instance, given the extent of potential losses for retailers arising from strict application of the ‘banned conditions’, it is highly unlikely that such retailers have not calculated the costs and established alternative ways of obtaining equivalent monies via allowed or new conditions in current trading relationships (see rationale here). Furthermore, given that we are living through a period of unprecedented financial pressures, with CEO and senior management changes in each of the major multiples, it is unrealistic to expect new management to risk or tolerate any dilution of profitability, if alternative ways can be found to ‘keep the money’.

Suppliers are obviously playing a close-to-chest game. Whilst the major players are operating to global agendae, there has to be a GSCOP-influenced reason for some of the recent mega-takeovers, especially in Health & Beauty, in order to increase scale on the supplier side of the equation. In addition, the extending of credit terms to ninety days by some major suppliers has to be a reflection, to some extent, of the pressure they are experiencing at the retail end of the supply chain.

However, the more successful the major suppliers are in maintaining their supplier-retailer balance-of-power, the more crucial it is that medium and smaller suppliers take advantage of this final ‘opportunity-in-hiding’, and optimise the role of the GSCOP-Adjudicator by speaking out, in secret, before this particular shop window closes, forever…

Finally, Mr Cameron, the key to any progress with the GSCOP initiatives has to be the ability of the Adjudicator to ensure the confidentiality of discussions with those suppliers willing to come forward.

In other words, a single instance of a compromising memory-stick going astray will send GSCOP into terminal decline, unless of course the number of complaining suppliers is too great to delist…

KamTips: The GSCOP-Adjudicator, Something to Adjudicate?…see NamNews August 2010

Date article published: August 2010

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