Tesco investigation puts spotlight on supplier relationships

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 Christine Tacon’s decision to investigate Tesco’s behaviour towards its suppliers is not entirely surprising given that she signalled her concerns back in September.

MDDmugshotBut hidden down page in the Grocery Code Administrator’s statement last week was the revelation that she could extend the investigation to other retailers if evidence came to light to justify that.

The Tesco investigation will focus on allegations relating to delays to payments to suppliers as well as payments for better positioning of goods.

And it clearly touched a nerve among procurement professionals. “For too long the retail sector has felt able to operate according to its own norms and practices without regard for best practice in procurement and supply chain management,” said David Noble, group chief executive of the Chartered Institute of Procurement & Supply.

“Regulatory action or no, if the UK’s retail supply chains are run without the right people in place and for the sole purpose of reducing costs and squeezing suppliers, it will only be a matter of time until the next scandal comes to light. We must take this opportunity to change course now,” he warned.

Tacon’s decision came just two days after Tesco launched an online supplier community “to boost collaboration, innovation and sustainability across its suppliers”.

Jason Tarry, Tesco’s head of commercial, said: “The network will play an integral part in our partnerships with suppliers to deliver for our customers.”

This signals Tesco’s intention to build stronger relationships with suppliers. And it would be nice to think that this will mark a turning point in supply chain relationships more generally. But it’s a fiercely competitive market and retailers are under immense pressure for every last penny of profit.

The spotlight is firmly on supplier relationships – and strengthening them is going to be a challenge.

Malory Davies FCILT,

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