UK retailer Asda has responded to recent reports on its ‘open book’ accounting agreement with suppliers.
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The scheme allows the retailer to view exactly what profit margins the supplier makes on the products it supplies.
Asda stressed that the agreement, reached with seven suppliers who now supply the lion’s share – or all – its requirements for certain produce lines, is strictly voluntary. The group stated: “The reason for suggesting to a supplier that we have an open book arrangement is to ensure that where we were giving all or the vast majority of our order to them their business is strong enough to cope with the increased demand on a long-term basis.”
The group further stressed: “Suppliers who enter this kind of relationship with us do so […] with a view to growing their business and taking advantage of some of the savings we can bring – for example we look at their running costs such as utilities, transport and distribution costs and put them in touch with ASDA partners to make savings.
“There is no contractual obligation to enter ‘open book’ agreements, and suppliers that have said they were unwilling to do so are not only still working with ASDA but have grown their business with us”.
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By GlobalDataAsda also pointed out that the ‘open book’ system has been in existence for three years.
Mark Harrod, speaking on behalf of Fenmarc, a major supplier of root vegetables to Asda, commented that his company had been put under no pressure to sign up to the ‘open book’ system. On the contrary, he said it gave his company greater long-term security and was proving a positive move.
