Morrisons is to scrap a raft of charges for suppliers as part of its wider drive to be easier and more transparent to work with.
As of this month, Morrisons will no longer be charging suppliers for dealing with customer complaints, access to the Morrisons Supplier Database (MSD), legal compliance checks of products specs, training for supplier teams through the Morrisons Supplier Academy, and access to the M Create portal for managing own-brand development.
The retailer notified suppliers this week in a letter from group commercial director Darren Blackhurst. In it he explains that the changes have come about as a result of feedback given through the retailer’s Supplier Listening Survey, set up after the supplier conference in November. It was there that Blackhurst revealed Morrisons planned to reduce commercial income mechanics from 37 to three.
In this week’s letter Blackhurst also explained Morrisons was introducing a simpler standard supply agreement and a commitment to resolve all cost price invoice queries within five working days. He claimed it had already successfully hit this target for the last 13 weeks.
Over the next three months Morrisons will also lower the costs of artwork production, accelerate the introduction of ‘good faith receiving’ for deliveries into its fresh warehouses, develop longer-term business plans, and launch an independent whistleblowing service, set to launch on 3 April.
Blackhurst said the response to the survey has “helped us understand what we do well and where we can make improvements. Listening is powering our overall turnaround and will help us to achieve our ambitions with you, our valued suppliers.”
He pledged to share further details on the changes at its next supplier conference in Harrogate next month.
The wider changes to how Morrisons deals with its suppliers follows an investigation by the Grocery Code Adjudicator last year in which demands for lump sum payments of up to £2m per supplier were exposed. Though Morrisons escaped a fine, it’s understood a number of buyers left the business.
“This is a positive step by Morrisons to simplify the way they work with suppliers and removes one of the key charges that have been costing suppliers significant amounts of money, namely customer complaints,” said negotiation training expert Ged Futter. “Without seeing the new supply agreement we can’t comment on it. However for all suppliers to have a supply agreement is certainly a step forward. And resolving cost price invoice queries in five days will go down well with suppliers although I have not been hearing it being the issue that it used to be.”
He added that in removing customer complaint charges, Morrisons was following in Iceland’s footsteps. It removed the charge last year. “Lowering the cost of artwork will be received very positively by own label suppliers as will ‘good faith receiving’. ‘Drop & drive’ issues have been an ongoing issue for many suppliers and introducing ‘good faith receiving’ should help with this issue,” he said.
“These moves by Morrisons are encouraging and demonstrate a move towards a collaborative and strategic approach to working with suppliers. This can only have a stabilising effect for suppliers during what has been a tumultuous 12 months.”
David Sables, CEO of Sentinel Management Consultants, added: “They know they’ve got work to do in this area and it’s an attempt to feel that they are talking a good game.
For years the big retail businesses have talked like this at conferences and in projects in the absolute knowledge that it’s business as usual back at the ranch.
The question is are they going to walk the talk. There’s not many savvy suppliers ready to pay it forward or take the leap of faith with Morisons yet. So the the outcome of this has to be tangible tradeable commitments to suppliers rather than warm words. Which means the business planning element is key as I don’t see much else of real value here.”
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