Retailer-supplier relationships are back in the spotlight as Asda and Somerfield make wholesale changes to their supply base.
Asda has clarified terms for own label suppliers in the wake of a dispute last year with Ferndale Foods, whose ready meals were delisted in favour of Northern Foods.
In its general online guidelines for suppliers, Asda tells them it reserves the right to terminate contracts after a minimum written notice of 90 days. It has also confirmed its existing 60-day payment terms, although selected suppliers will still be paid more frequently.
The move comes after industry experts said one way of resolving disputes such as that between Asda and Ferndale would be to ensure key contract terms were put into writing. The OFT said it wanted to see more written contracts after reviewing the code of practice last year.
One supplier said: “Asda has done this because of its dispute with Ferndale Foods.” Another added: “This is inconsistent with Andy Bond’s October speech at the IGD convention when he said that Asda wanted to invest in suppliers’ futures. How can they claim that if they’re saying they can end contracts after just 90 days’ notice?”
An Asda spokeswoman said the new terms would clarify the position for everyone. “Previously we have either been under no obligation to give notice or the notice period to terminate supply was 12 weeks or less.”
Meanwhile, Somerfield this week announced that it was to begin a cull of suppliers as it rationalised product lines. It will be rooting out underperforming and unprofitable lines.
A spokeswoman said: “Our range has grown as a result of store acquisition activity and does not reflect the optimum range for our business.”
The rationalisation follows hot on the heels of chief executive Steve Back’s shock departure at the end of last week and the announcement that former Asda and Matalan boss Paul Mason will take over in March. Colin Smith, former Tesco trading director, is also joining as trading and marketing director.
Shore capital analyst Clive Black said rationalisation was a way for Somerfield to get
Rod Addy & Fiona McLelland
Asda has clarified terms for own label suppliers in the wake of a dispute last year with Ferndale Foods, whose ready meals were delisted in favour of Northern Foods.
In its general online guidelines for suppliers, Asda tells them it reserves the right to terminate contracts after a minimum written notice of 90 days. It has also confirmed its existing 60-day payment terms, although selected suppliers will still be paid more frequently.
The move comes after industry experts said one way of resolving disputes such as that between Asda and Ferndale would be to ensure key contract terms were put into writing. The OFT said it wanted to see more written contracts after reviewing the code of practice last year.
One supplier said: “Asda has done this because of its dispute with Ferndale Foods.” Another added: “This is inconsistent with Andy Bond’s October speech at the IGD convention when he said that Asda wanted to invest in suppliers’ futures. How can they claim that if they’re saying they can end contracts after just 90 days’ notice?”
An Asda spokeswoman said the new terms would clarify the position for everyone. “Previously we have either been under no obligation to give notice or the notice period to terminate supply was 12 weeks or less.”
Meanwhile, Somerfield this week announced that it was to begin a cull of suppliers as it rationalised product lines. It will be rooting out underperforming and unprofitable lines.
A spokeswoman said: “Our range has grown as a result of store acquisition activity and does not reflect the optimum range for our business.”
The rationalisation follows hot on the heels of chief executive Steve Back’s shock departure at the end of last week and the announcement that former Asda and Matalan boss Paul Mason will take over in March. Colin Smith, former Tesco trading director, is also joining as trading and marketing director.
Shore capital analyst Clive Black said rationalisation was a way for Somerfield to get
Rod Addy & Fiona McLelland
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