The Groceries (Supply Chain Practices) Market Investigation Order 2009 (the “Order”) has been in force since 4 February 2010. The Order implemented the Groceries Supply Code of Practice (the “Code”) which applies to fourteen designated grocery retailers, including Asda, and governs our dealings with grocery supplier partners.
Every year we submit an Annual Compliance Report (“ACR”) to the Competition and Markets Authority (the “CMA”) and the Groceries Code Adjudicator (the “GCA”) to detail our compliance with the Code, any alleged breaches of the Code and any Disputes with suppliers.
We delivered our eleventh report, covering the period from 1 January 2021 to 31 December 2021 (inclusive), to the CMA and the GCA on 28 April 2022.
We are pleased by our performance in the GCA’s 2021 Survey. The results are testament to the strong, collaborative relationships we have built with our suppliers and demonstrate our high level of compliance with the Code during some of the most challenging times the retail sector has ever faced.
In 2021, we received responses from over 1,000 direct suppliers, which is the highest response rate to date. 94% of suppliers agreed that Asda consistently or mostly follows the Code. Of the twenty-eight Code-related areas that were explored, our scoring improved in eighteen, remained flat year-on-year in nine and stepped back slightly in one.
The number of suppliers who reported having Code-related issues in the Annual Supplier Survey continued to reduce.
Asda has taken numerous steps in the past year to drive on-going compliance with the Code and support the GCA’s agenda, such as:
- Appointing Graeme Morrison as Asda’s new Code Compliance Officer (“Asda’s CCO”) in 2021. Graeme adheres to the Confidentiality Agreement published in January 2021, treating all discussions with suppliers in the strictest of confidence, except where otherwise agreed with the supplier;
- Enhancing internal monitoring for Code-related activities, including de-listing, forecasting and post-payment audit to ensure that the controls work effectively, and suppliers are treated fairly;
- Implementing additional controls to align Asda’s post-payment audit procedures with the GCA’s recent ‘Best Practice Statement: Forensic Auditing’;
- Improving the Supply team structure, providing demand planning and collaboration resource to suppliers, and promoting more collaborative ways of working which has proven to be invaluable during the recent volatile market conditions; and
- Asda’s CCO presenting at the GCA’s Supplier Conference in September 2021, supporting the GCA’s aims of promoting supplier awareness and engagement with the Code.
During 2021, we rolled out a substantial training programme for colleagues whose role touches and concerns the Code.
Across Q2 and Q3, Asda delivered interactive online training sessions alongside Commercial Category Directors, which explored key provisions of the Code and how the buying colleagues should apply these provisions to their role. The sessions were complimented by video-based learning modules.
202 buying colleagues received training. In addition, we also provided bespoke and virtual training modules to 107 colleagues from the Supply, Customer Planning and Finance functions.
Reportable Issues in the ACR
We received twenty-eight alleged breaches in 2021, which represents a year-on-year decline. In line with the GCA feedback, we define all matters (six from 2021) to be ‘on-going’ where it is unresolved at the end of the reporting period (31 December 2021).
The majority of matters raised by suppliers related to de-listing decisions, typically where a supplier exercised the right to have a de-list decision reviewed in accordance with the Code. Post-payment audit matters were another common theme. We continue to support suppliers through the process and are continuously improving how we work in this area.
One alleged breach dating back to 2020 constituted a formal Dispute, as defined under Article 11 of the Order, and has since been resolved. In 2021, no supplier exercised the right to commence arbitration proceedings under Article 11(5) of the Order.
Contact Asda’s CCO
Given the continuing and varied challenges posed to both Asda and our suppliers over the course of the past year, Asda continues to be immensely proud of the strong and inter-dependent relationships that have been established with our suppliers.
However, we accept that there is always room for improvement, and with this in mind Asda’s CCO, Graeme Morrison, encourages open and honest feedback with respect to how we are adhering to the Code. Asda’s suppliers can contact Asda’s CCO by emailing AsdaCCO@asda.co.uk. Any Code-related concerns will be addressed as a priority and in confidence.
Date: 28 April 2022