Supply chain

Retailers and wholesalers rely on sophisticated and highly efficient supply chains to deliver value to consumers and foster innovation. Retail is the last and most visible link in a highly complex supply chain including wholesalers, manufacturers, processors and primary producers such as farmers. To meet consumers’ needs and continuously changing demand, retailers’ competitive position also depends on sustainable supply chains.

In 2011, EuroCommerce initiated a multi-stakeholder dialogue to discuss fair/unfair trading practices in the food supply chain, leading to:

• The adoption in November 2011 by 11 EU level association across the whole supply chain, of a set of Principles of Good Practice to ensure fairer business relations – welcomed by the Commission led High Level Forum on a Better Functioning Food Supply Chain, the European Parliament and the Council;
• The launch in September 2013 of the “Supply Chain Initiative”, an initiative of 7 EU level retailer, manufacturer and wholesaler associations to implement and enforce these principles. In July 2014, 100 groups representing 764 national operations in retail, wholesale and manufacturing had signed up to this initiative.

In the meantime, the food supply chain has been under intense scrutiny by EU policy makers, leading to a Green Paper consultation on unfair trading practices in 2013, an unpublished Impact Assessment and a Communication on unfair trading practices in the B2B food supply chain in July 2014. In its Communication, the Commission recognises and encourages the development of the Supply Chain Initiative and calls on Member States “to tackle unfair trading practices in an appropriate and proportionate manner depending on national circumstances”.

Key messages:

1. Competition: Retailers thrive on fierce competition. Competitive markets bring innovation, choice, quality and low prices to consumers. Unlike manufacturing, net margins are typically low (2-3% on average).
   
   
2. Consumers at the heart of the supply chain: The supply chain exists to supply consumers with the goods they demand, at prices they are willing and able to pay and which provide value for money across the entire range of products.
    
3. Efficient and sustainable supply chains: To meet consumers’ needs, retailers invest in efficient supply chains. Engaging in unfair practices would undermine their ability to source and offer a wide range of products, damaging their competitive position.
    
4. Fair dealing: Retailers believe in fair dealing and freedom of contract as the basis for their commercial relationships. A voluntary approach is the right way forward and no legislative measures should be proposed until the Supply Chain Initiative has delivered results.