Australian supermarket giant Coles has launched a new Supplier Charter, which it said sets out what merchandise suppliers can expect when they work with Coles.

Coles has announced a three stage framework to resolve disputes with its suppliers under a Coles Supplier Charter, which includes the appointment of former Victorian Premier Jeff Kennett as an independent arbiter to oversee the charter and resolve disputes.

The Coles Charter is to be operative from 6 August 2014 and it appears to mirror similar provisions to those in the proposed Supermarket Code of Conduct, which was announced on 18 November 2013 and is expected to take effect sometime in 2014.

Coles Managing Director, John Durkan, said Mr Kennett would play a pivotal role in an innovative and transparent model to drive equitable outcomes in business-to-business dealings.

“Coles is committed to supporting our suppliers so they can grow their business alongside ours and continue to deliver great products for our customers,” Mr Durkan said. “We recognise the importance of building strong, collaborative and wherever possible, long-term partnerships. We are already changing the way we do business by introducing more long-term contracts which help suppliers to plan and invest in the future,” he said.

“To underpin our commitment we have launched a new Charter which sets out what suppliers can expect when they work with Coles,” Mr Durkan said. “It is a formal commitment to deal in good faith with our suppliers, ensuring they are always treated with respect and that our commercial dealings with them ar transparent,” he said.

“A key measure to strengthen confidence is to establish a rigorous, independent third party process to resolve disputes, and to ensure Coles is held accountable,” Mr Durkan said.

Mr Durkan said Mr Kennett had agreed to accept a part-time role as independent arbiter for the next three years.

“We accept he has articulated strong views about Coles’ conduct in the past, and that he will do so when and where necessary into the future,” Mr Durkan said. “We believe his reputation as an independent voice will stand any test,” he said.

“Mr Kennett will make recommendations directly to me on proposals to resolve disputes,” Mr Durkan said. “Should there continue to be disagreements, Mr Kennett’s final recommendations will be binding on Coles,” he said.

“If Mr Kennett feels the need, he is free to publish his decisions or raise any concerns externally, as he sees fit, including through the media, the Australian Consumer and Competition Commission and other relevant authorities,” Mr Durkan said.

Opportunity to ‘strengthen supply chain relationships’, Kennett

Mr Kennett said he welcomed the appointment as an important opportunity to strengthen relationships across the supply chain in Australia’s food production and processing industries.

“Coles and its many millions of customers are among the biggest buyers of fresh produce and other groceries,” Mr Kennett said. “It is an important relationship. If it works well, it will serve the interests not only of Coles and Australia but it will also help build a platform that will enable Australia’s food industry to compete effectively in the major overseas markets to our north,” he said.

“I hope my services as the independent arbiter will rarely be called upon,” Mr Kennett said. “But if there are disputes that require intervention, I can assure both and all parties of my complete independence in determining a common sense solution,” he said.

Arbiter role part of complaints resolution framework

Mr Durkan said Mr Kennett’s role would form part of a complaints resolution Framework that would ensure the company acted in compliance with a new Coles Supplier Charter.

The Coles Supplier Charter will govern relationships with farmers, food processors and other grocery suppliers and provide avenues for quick and equitable resolution of disputes. Coles will fund and implement the new Charter Framework.

“Coles is an Australian-owned company with a proud 100-year history in retailing,” Mr Durkan said. “We do our best to conduct transparent business relationships with our thousands of suppliers in good faith. But we also recognise the reality that commercial negotiations can sometimes lead to disputes,” he said.

“We think it is important to address problems when they occur, and to correct mistakes when they happen,” Mr Durkan said. “The Coles Supplier Charter will ensure our own team members are always thinking actively about their responsibilities to conduct business dealings collaboratively and in good faith,” he said.

The Charter framework will involve three complaints procedures for suppliers: referral to a dispute resolution manager via a confidential process; high-level internal review; and, recourse to the independent arbiter. Use of the framework will be free for suppliers.

Mr Kennett, as independent arbiter, will report annually on his activities. This may include recommendations on how to improve the Charter and Framework.

Anonymous supplier survey feedback

Mr Durkan said Coles will also commission an independent anonymous survey of suppliers on the workings of the new system, including any recommendations they might have for improvements.

“Coles understands and accepts its obligations, and extends in good faith this new approach to resolving disputes with suppliers,” Mr Durkan said. “We aim to do the right thing by our suppliers. If there are flaws or failings, we fully expect to be held to account under the Coles Supplier Charter, including by Mr Kennett, as the independent umpire,” he said.

Nothing in the framework will preclude any supplier from raising any complaint or dispute with the ACCC or under any applicable industry code.

“The Coles Supplier Charter has been designed to complement the great work done by the Australian Food & Grocery Council on a Prescribed Food and Grocery Code of Conduct,” Mr Durkan said. “Coles will continue to work closely with the AFGC, government and other industry stakeholders to progress the broader grocery sector code,” he said.

AusVeg cautiously welcomes Coles Supplier Charter announcement

The announcement by Coles that it wants to improve supplier relations by implementing a Supplier Charter has been cautiously welcomed by vegetable and potato growers’ representative body AusVeg.

AusVeg spokesperson Andrew White said that while he welcomed the announcement by Coles it was important that the process was independent and effective.

“Any attempts by supermarkets to improve relationships with their suppliers are welcome however we will be closely monitoring the implementation of the proposed framework, to ensure that it is delivering effective outcomes for growers,” Mr White said.

Mr White said integrity in dealings between suppliers and major retailers was “incredibly important to ensuring successful business relationships”.

“Coles is a major distributor of vegetables to Australian consumers so it is vital that there are long-term strategies in place to deal with potential disputes between retailers and their suppliers,” Mr White said.

“We recognise also that the framework does not preclude parties raising complaints with the Australian Competition and Consumer Commission, which is an important avenue for growers to raise concerns,” Mr White said.

The Coles Supplier Charter

1. Commitment to good faith dealings and transparent commercial processes

 

• We will negotiate in good faith.

• We will conduct transparent and reasonable commercial processes.

 

2. Commitment to transparent grocery supply agreements

 

• We will operate within the agreed terms and respect the spirit of each grocery supply agreement and commercial relationship.

• We will ensure all grocery supply agreements are recorded in writing, with clear, unambiguous and concise terms.

• We will make sure all grocery supply agreements are readily accessible by both parties.

 

3. Commitment to the terms of grocery supply agreements

 

• We will not vary a grocery supply agreement without supplier consent, unless provided for in the grocery supply agreement.

• We will give reasonable notice of changes to supply arrangements.

 

4. Commitment to transparency around ranging and de-listing

 

• We will develop product ranging and shelf-allocation principles and share them on our Supplier Portal.

• We will apply the product ranging and shelf-allocation principles without discrimination in favour of own brand products.

• We will provide written notice of ranging criteria for range reviews.

• We will provide reasons for, and reasonable notice of, de-listing and changes to distribution to all suppliers.

• We will guarantee that ranging and de-listing decisions are, on request by suppliers, referred to senior managers within Coles for review.

 

5. Commitment to respect the integrity of suppliers’ businesses

 

• We will respect every supplier’s intellectual property rights.

• We will ensure that we do not infringe suppliers’ intellectual property rights.

• We will ensure that suppliers’ confidential information is appropriately protected.

 

6. Commitment to facilitating our trading relationships

 

• We will pay for goods delivered and accepted in accordance with the relevant grocery supply agreement on time and in full.

• We will resolve payment disputes promptly.

• We will ensure that Coles’ product quality specifications and standards are clear and unambiguous.

• We will ensure that Coles’ labelling and packaging requirements are clear and unambiguous.

 

7. Commitment to fast-track, low-cost supplier dispute resolution framework.

 

• We will provide three alternative procedures for complaint resolution, including:

• a) direct referral to the Dispute Resolution Manager; and/or

• b) internal review and referral through senior management; and/or

• c) referral to an Independent Arbiter.

• We will not disadvantage or treat adversely any supplier who relies, or seeks to rely, on the dispute resolution framework.

 

The Framework can be found on the Coles Supplier Portal at Coles Supplier Charter Framework .