Coles/Wesfarmers For many years the Australian grocery sector has been dominated
ID: 383967 • Letter: C
Question
Coles/Wesfarmers For many years the Australian grocery sector has been dominated by two major players Coles and Woolworths (Safeway). Over the last decade or so both companies have been subject to scrutiny with regard to supplier management and there have been many negative claims made. There are a large number of newspaper and journal articles related to the way the company engages and works with its suppliers. In 2011, the ACCC brought charges against Coles for unconscionable conduct in dealing with suppliers and was found negligent. In response, the company appointed the former Victorian Premier Mr Jeff Kennett as an independent arbiter to engage with suppliers and oversee disputes. Currently, Wesfarmers (Coles) has 15,000 suppliers. For this research project, you will need to conduct an extensive search online. There are many newspaper and journal articles freely available online and you can also access the company website as well as many of their supplier websites.
Research on Coles Supplier Management and summarise what you think about the Company. Do you think Suppliers are in a real, collaborative relationship with the Coles Group? Explain your answer.
Explanation / Answer
Coles is one of the largest grocery unit in the retail sector of Australia. The reason for having a large number of suppliers connected to it. In 2014 ACCC took legal action against Coles for unconscionable conduct against its suppliers. ACCC claimed the coles practiced inappropriate ways to increase its earnings through the suppliers. They charged penalties and fines on suppliers for the profit gap which was not in any prior agreement with them. They made misuse of their bargaining power and thus treated their suppliers in a way unacceptable legally and socially. Other then demanding money from the suppliers through improper means they also witheld the payments of the suppliers which was due to be paid to them.
On basis of the above unconscionable conduct ACCC filed a legal case against the company in which they were held guilty. After the judgement of the court against the company, Coles admitted the unconscionable conduct in dealing with their 200 small suppliers. On 16 Dec 2014 ACCC and Coles mutually agreed on $10 Million penalty which Coles will pay to its suppliers. Coles's managing director accepted and apologised for its actions in dealing with the suppliers. He accepted that in dealing with the suppliers Coles misued its power and followed an unacceptable business practice.