Coles is considering widening an overhaul of its supermarket supply chain by extending it to almost 1500 Coles Express convenience stores and liquor outlets. The likely shake-up would touch every grocery item from beer to bread.
A confidential Coles tender document obtained by BusinessDay sets out the company's blueprint to restructure the relationship between it, suppliers and field agents - also known as "reps" - and proposes the new arrangements could be implemented at its petrol station network as well as Coles liquor arms Liquorland, 1st Choice and Vintage Cellars.
BusinessDay has also learnt that Coles is drawing a short list of interested parties to fill the ranks of its maiden panel of "approved" field agents for its supermarkets after its first tender round under the new plan closed last Friday.
Originally it was planned for the new supermarket supply arrangements to be running from July 1, but that now looks to have been pushed back towards the end of this year. It is intended to be offered to all Coles grocery suppliers by late 2015.
As revealed last month, Coles is seeking to raise its own panel of approved field agents who, armed with a range of fees negotiated with Coles rather than suppliers, as is now the case, would go out to food suppliers to tender for their services. This would turn the relationship between these agents and suppliers on its head and carve out hundreds of millions of dollars in costs from Coles' supply chain.
Under the new system, these field agents on the Coles panel will also be required to invest in IT hardware and software as well as pay an as yet unspecified rebate back to Coles.
Coles says the arrangements will drive efficiency and deliver a better service to suppliers.
"Most of our large and medium suppliers maintain a significant field force to visit our stores on a weekly basis," the confidential Coles tender argues. "Up to 30 field reps visit our stores in a day. There is a significant difference in the ways of working of the field reps of each of our suppliers and this causes disruption to Coles store operations.
"To resolve all these issues, Coles is exploring options for creating a panel of third party field force companies that could be used by our suppliers."
Working away in supermarket aisles with the name of the grocery brand on their workwear, these field reps typically replace perishable food stock, such as bread, and negotiate deals with supermarket store managers over special promotions such as in-store demonstrations and displays. They typically charge a fee of about 5 per cent of sales back to suppliers.
However, under the restructure Coles would use its market power to negotiate those fees down substantially, reclaiming much of them for itself while tightening its grip over its own supply chain.
The shake-up has alarmed field agents, who number more than 20,000 people, and could result in slashed earnings. A representative of field agents met with Coles merchandise director John Durkin to plead their case, but Coles looks to be pushing ahead with the restructure.
Especially worrying to the field agents is the idea that only accredited agents who make up the Coles panel will get access to the supermarket, sidelining independent agents and rendering them of little use to manufacturers who must have agents in the stores watching over their stock.
Until now that fallout was limited to its supermarkets but the supplier overhaul could soon extend to 630 Coles Express service stations and roughly 800 branded liquor stores.
However, the tender documents state that there was no plan to expand the restructure to other businesses owned by Wesfarmers, which owns Coles, such as Bunnings, Officeworks and Kmart.
Coles has claimed that no field agents will be "pushed" into the new system. It says any agents who wish to remain outside the system will need to complete a training course and pay an "accreditation" fee to Coles.
A spokeswoman for Woolworths said it had no plans to implement a similar policy at its supermarkets.