Woolworths is set to probe unauthorised deductions from supplier payments following revelations by an independent supermarket reviewer of an industry-wide issue.
The $145bn national food and grocery manufacturing sectors have spotlighted unauthorised invoice deductions by leading supermarket chains, such as Coles and Aldi. They are urging the federal government-appointed independent reviewer to directly address this with the top management of these chains.
Woolworths’ CEO, Brad Banducci, emphasised to The Australian the urgency to resolve these unauthorised deductions, asserting that such deductions against established policies or without supplier consent were not Woolworths’ practice. He highlighted that while Woolworths partners with both large corporations and small startups, there is a need to manage these different suppliers more effectively.
Furthermore, Woolworths has committed to refining its supplier portal, delivering more sales data to smaller suppliers, and aiming to ensure these suppliers are paid within 14 days. Natalie Davis, Woolworths’ Managing Director of Supermarkets, will oversee commercial relationships, especially with those suppliers who have raised concerns under the Food and Grocery Code of Conduct.
This code, a voluntary agreement within the Competition and Consumer Act, defines the dynamics between supermarkets and suppliers. Key players, including Woolworths, Coles, Aldi, and wholesaler Metcash, are under ACCC’s compliance and enforcement purview.
Chris Leptos, the independent reviewer for the Food and Grocery Code of Conduct, has recently relayed anonymous complaints from suppliers to supermarket leaders. Strengthening the code in 2020, Mr. Leptos also facilitates dispute resolutions. He highlighted unauthorised deductions as a predominant issue for all signatories.
Having met with Coles’ new chief, Leah Weckert, Mr Leptos also received a letter from Mr Banducci outlining Woolworths’ plans to enhance supplier relations and address unauthorised deductions. Mr Banducci reiterated to The Australian the need to unravel the causes behind these deductions, emphasising that it wasn’t in line with Woolworths’ policy.
In a letter dated July 20, Mr. Banducci informed Mr. Leptos of the steps taken based on supplier feedback, including the enhancement of the supplier portal experience, especially for smaller suppliers. He also emphasised that they had achieved a 97.2% on-time payment rate to small business trade partners in recent years.
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