The demands of supply

Two years ago, in the wake of the horse meat scandal, Tesco pledged a wholesale review of its relationships with suppliers, promising to increase transparency and foster greater collaboration. “I am determined to build a clear and sustainable relationship of equals,” then-chief executive Philip Clarke told the National Farmers’ Union. And yet just last week, the supermarket giant was accused of bullying suppliers. The resulting outcry demonstrates just how important supply chain equity has become.

Poor ethics mean poor optics

Whether it’s cocoa pickers in West Africa, needleworkers in Bangladesh, or dairy farmers in the UK, no customer wants to imagine that their enjoyment of a product is the result of human suffering. A growing awareness of poor working conditions explains the rapid rise of the global fair trade movement and lies at the heart of corporate moves to demonstrate responsible citizenship. Here in Britain, the government has introduced anti-trafficking accreditation for supermarkets whose suppliers are trained to recognise worker exploitation. Sainsbury’s has already signed up to the scheme – and those who don’t may have customers wondering just how much they empathetic they really are.

Steamrolling suppliers is a risky strategy

Tesco has demanded price cuts from its suppliers, with thirty-eight per cent claiming to have received demands for payments in order to get their goods onto the supermarket’s shelves. This latest controversy comes as the company struggles to explain a dive in its annual profits for the second year running and while its business practices are under investigation by the groceries code adjudicator, who regulates supermarket powers over suppliers. Cutting the bottom line is one way to boost profit margins – but surely this is not the moment to look like a pantomime villain? We live in a country so keen on rooting for “the little guy” that we have a National Underdog Day – and even the most loyal customers are quite capable of voting with their feet if they sense unfairness. Showing a softer side, as counterintuitive as that may be, would go much further to shoring up the business.

The cynics among us would suggest that companies only bother with sustainability initiatives thanks to regulatory pressure. The optimists would say that even within the most avaricious tycoon lies a beating human heart. It’s time for Tesco to prove it has one.