Beatriz Quicaña, COLES & SUPPLIERS, 12 de junio de 2019, 697 palabras.

QUESTIONS

1. First Question
a) What unconscionable practices were Coles and Woolworths applying
to their suppliers?
Coles and Woolworths put undue pressure on their suppliers even though
they had no contractual right to do so. Sims (2014) states "We claim that
Coles took advantage of his superior negotiating position to demand money
that he knew or should have known he had no right to do so", in addition
they asked the suppliers to pay the profit gaps, this is the difference
between the amount of profits that Coles wanted to obtain on the goods and
the amount he achieved. The control agency also alleges that Coles
pursued agreements with suppliers for amounts that it claimed as "waste" of
a supplier's goods and price reductions or "discounts" used by Coles to
liquidate the products.
Another of the tactics used was known as "cliff" causing vendors to pay for
the spaces on the shelves or otherwise lose the lot. Those in charge of
negotiating with the suppliers were aggressive and threatening, this caused
fear of meeting requests from suppliers, Kennett (2015) states "They
threatened if a supplier did not accept new charges, their products might
not be available in the shelves of Coles in the future. "

b) How were the suppliers and food industry being affected by these
practices?
In the case of suppliers, they had economic losses in their investments due
to the removal of many of their products from the shelves of the
supermarkets, this generates lower profits in their businesses. Wahington
(2011) states "Consumers are seeing how some of Australia's best-known
brands disappear from supermarket shelves amid industry forecasts that
food manufacturing in Australia will be cut in half in a decade "
Regarding the food industry Cooper (2011) states: "The reality is that the
Australian food sector is dominated by large multinational food
 manufacturing companies, many of which charge Australian buyers much
higher prices for their products than what they offer. "This means that
importing products at lower prices will generate more competition for
suppliers and the food industry will vary.

c) What did Coles and Woolworths eventually do following the

investigation and action by the regulator?
After denying all charges charged against them, Coles and Woolworths
agreed to pay a $ 10 million fine to the affected providers. They admitted
that they pressured small suppliers to pay for ongoing refunds. The CEO of
Coles issued a statement, Durkan (2011) states "Coles apologizes
unconditionally and accepts full responsibility for their actions in these
dealings with suppliers."
Woolworths has followed the example of Coles, Medina (2011) states "As of
July 1 this year, Woolworths Supermarkets will pay suppliers with net sales
to Woolworths of less than $ 1 million in 14 days.
The fact that these large companies have acknowledged their mishandling
does not mean that they do not return these types of threats to suppliers.

2. Second Question
a) From a supply chain perspective, does what Coles was doing support
the supply chain’s overall profitability? Why?
Coles imposed fines or sanctions on suppliers for delaying deliveries,
actively managed waste problems and poor performance of products so
that prices for customers are not increased.
Coles (2010) states "Product waste can arise from various means, including
defective packaging of the product by suppliers, suppliers that deliver
products too close to their expiration date, or poor management by
suppliers. or Coles, "waste payments are a common commercial practice in
retail in Australia. The ACCC has also accused Coles of withholding the
money owed to suppliers and refusing to return the money when he knew
he had no right to do so.

3. Third Question
a) Why do you think that Coles finally accepted its malpractice and
decided to pay the fines?
I think that Coles accepted the blame due to the great pressure of the media
and also because of the fear of losing clients due to the scandals caused
due to their hostile acts with the suppliers. Coles had to take care of his
image in front of the clients but could have less income and considerable
losses in the profits of the company.