Tesco is simply a train that moved too fast, causing some of the wheels to fall off.....
The real issue is the opportunity this high-profile case provides for the SFO to attempt to restore a reputation that has been tarnished by a series of high profile failures in recent years. This relatively clean case of naive manipulation by amateurs, gives the SFO the means of demonstrating its ability to investigate and penalise corporate wrongdoing, secure in the knowledge that Tesco, or its management, are unlikely to retaliate in the case of possible over-enthusiastic application of the letter-of-the-fraud investigation process, unlike a recent SFO investigation....
The disruptive impact on the day-to-day conduct of the Tesco business should not be underestimated, given that the recent Deloitte investigation, albeit a far less comprehensive project, allegedly involved more than six million documents with 18,000 invoices reviewed and 700 scruitinised in detail....
Apart from the inevitable parallel but internal reviews by other multiples, 'just-in-case', many suppliers are already conducting internal reviews to assess any possible impact on the integrity of their trade investment process. However, it has to be said that in the main, these reviews will hopefully be in private, the only issue being relationships with internal audit-control, with NAMs having to explain how sums were authorised and paid in advance, possibly 'on a nod' in terms of promises of a promotion in the following year, all with the benefit of 20/20 hindsight...
Regrettably, whilst the consumer ultimately benefits from lower shelf-prices, the SFO investigation output will also result in a media-fest pointing out the 59 ways in which brand-owners incentivise retailers to persuade the shopper to buy more...
Finally, unfortunately for Tesco, this is not just a UK issue. Some Tesco shareholders live in the US, a country where people that feel they have been wronged, litigate, and Tesco shareholders will be no exception. Their approach will be in contrast with the UK, where in such cases it has been customary for the authorities to issue a reprimand, draw a line, and move on...
Any output from the SFO investigation will probably be used as a basis for shareholder class action in the US, in a search for compensation. In turn, any such result in the US courts will probably roll onto the UK stage, encouraging UK shareholders to seek similar compensation.
Overall there will be a change in supplier-retailer relationships, as all parties move to numbers-based assessment of cost and value, and the savvy consumer's demand for demonstrable value-for-money rolls back up the supply-chain.
Suppliers are now in a position to make or break Tesco, but it is imperative that any help given should not be unconditional...
In other words, Tesco and the SFO are presenting an unprecedented opportunity for suppliers to elevate the NAM-Customer relationship to a new level based upon fair-share dealings, where numbers count, and KPI achievement becomes the ultimate basis for retrospective performance-based reward...
All else is detail...
The real issue is the opportunity this high-profile case provides for the SFO to attempt to restore a reputation that has been tarnished by a series of high profile failures in recent years. This relatively clean case of naive manipulation by amateurs, gives the SFO the means of demonstrating its ability to investigate and penalise corporate wrongdoing, secure in the knowledge that Tesco, or its management, are unlikely to retaliate in the case of possible over-enthusiastic application of the letter-of-the-fraud investigation process, unlike a recent SFO investigation....
The disruptive impact on the day-to-day conduct of the Tesco business should not be underestimated, given that the recent Deloitte investigation, albeit a far less comprehensive project, allegedly involved more than six million documents with 18,000 invoices reviewed and 700 scruitinised in detail....
Apart from the inevitable parallel but internal reviews by other multiples, 'just-in-case', many suppliers are already conducting internal reviews to assess any possible impact on the integrity of their trade investment process. However, it has to be said that in the main, these reviews will hopefully be in private, the only issue being relationships with internal audit-control, with NAMs having to explain how sums were authorised and paid in advance, possibly 'on a nod' in terms of promises of a promotion in the following year, all with the benefit of 20/20 hindsight...
Regrettably, whilst the consumer ultimately benefits from lower shelf-prices, the SFO investigation output will also result in a media-fest pointing out the 59 ways in which brand-owners incentivise retailers to persuade the shopper to buy more...
Finally, unfortunately for Tesco, this is not just a UK issue. Some Tesco shareholders live in the US, a country where people that feel they have been wronged, litigate, and Tesco shareholders will be no exception. Their approach will be in contrast with the UK, where in such cases it has been customary for the authorities to issue a reprimand, draw a line, and move on...
Any output from the SFO investigation will probably be used as a basis for shareholder class action in the US, in a search for compensation. In turn, any such result in the US courts will probably roll onto the UK stage, encouraging UK shareholders to seek similar compensation.
Overall there will be a change in supplier-retailer relationships, as all parties move to numbers-based assessment of cost and value, and the savvy consumer's demand for demonstrable value-for-money rolls back up the supply-chain.
Suppliers are now in a position to make or break Tesco, but it is imperative that any help given should not be unconditional...
In other words, Tesco and the SFO are presenting an unprecedented opportunity for suppliers to elevate the NAM-Customer relationship to a new level based upon fair-share dealings, where numbers count, and KPI achievement becomes the ultimate basis for retrospective performance-based reward...
All else is detail...
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