According to research in January 2015 by Begbies Traynor, the number of suppliers in “significant distress” rose to 92 per cent at the end of 2014, with over 100 of these claiming that they were close to falling into administration.
At the time Julie Palmer, (job title) said that “A perfect storm is brewing for SME food suppliers at the bottom of the food supply chain, many suffer a double hit from larger suppliers demanding “loyalty” payments as well as vanishing margins as a result of the inevitable aggressive supermarket price war.”
Despite this, 2015 has seen significant steps being made towards protecting SMEs from being taken advantage of by those they supply. Following research conducted in June (2015) by a grocery watchdog, the Groceries Code Adjudicator is currently investigating Tesco for not complying with the Groceries Code.
The groceries code outlines a number of practices that must be adhered to in order to make sure that suppliers are dealt with fairly and paid on time. While Tesco’s and Morrisons received the worst ratings with 30 per cent of suppliers stating that they rarely complied with the code, other grocers including Aldi, M&S and Waitrose were rated highly for their compliance.
Stores such as Waitrose place emphasis on supporting local trade and adhere to both the Safe and Local Supplier Approval code which allows for a more open and transparent supply chain. This and the guidance outlined in the Groceries code ensures that SMEs are able to access more knowledge – and more importantly have more protection from potential problems caused by supplying members of the big four.