Do Tesco Buyers Know What They SHOULD Be Doing? David Atkinson Comments

The recent problems at Tesco, the UK’s largest supermarket group, continue to hit the business pages and often front pages too. The accounting irregularities discovered seem to focus on payments to and from suppliers, which has brought the focus onto the way Tesco (and indeed other supermarkets) treat those suppliers.

David Atkinson of Four Pillars, procurement and business trainer, adviser and writer, has written an excellent piece about the Tesco issue here. He picks up on an article in the Independent newspaper, that quotes one of Tesco’s suppliers as saying (and we paraphrase here) they offer other chains such as Aldi a better deal up front because they know dealing with Tesco is such a pain, and that Tesco will come back for more discounts, rebates and so on.

This shows one problem with treating suppliers badly, even if you are in an apparently dominant position in the supply chain like Tesco. Atkinson then looks at how procurement professionals should behave in large corporates, and links that to the work of John Henke on the link between good supplier management and profitability (see here). He suggests that buyers at the firm know what they should be doing, but aren’t able to.

“I imagine that positive supplier relationship management is far from an alien concept to Tesco buyers. I’m convinced they understand that collaboration, process improvement, and innovation all potentially lead to superior products and services from suppliers, and at lower cost; both total cost of ownership (TCO) and price.  No, I suspect the pressure to bully suppliers is coming from elsewhere in the company.”

He blames Finance for the way suppliers appear to be treated, with their “desperate scramble to hit the numbers,” although I would take it further and suggest this probably comes from the whole Board rather than purely the CFO. And he picks up on that in his final remarks about the need for effective supplier relationship management (SRM).

SRM is an enterprise-wide competence involving a wide range of stakeholders, and an appreciation of this in the boardroom would surely help most organisations.”

It’s another excellent piece from Atkinson, whose occasional articles are always worth looking out for – and do read the whole thing here.

Finally, one voice that may prove to be interesting in all this is that of the Grocery Code Adjudicator, Christine Tacon. I worked with her back at Mars Confectionery many years ago, and she’s smart and experienced in the industry. She has recently announced “that she has asked Tesco to examine its behaviour towards suppliers during the company’s internal review.”

That doesn’t sound like the strongest line to take, but let’s see what comes out of it. She needs to start getting a bit more active in this area, we might respectfully suggest, to show that her role has some teeth and isn’t just a token “we need to be seen to do something” bit of government PR.

Voices (2)

  1. Bitter and twisted:

    But do Tescos try it on with the big brands?
    The ones whose absence from Tescos shelves would be embarrassing.

  2. Chris C:

    The German discounters are far easier to work with – short, pragmatic and sensible communication chains. Also, they don’t rip you off on charges to attend presentations and delaying payments until post year end… However, branded suppliers may be in trouble since in the main the discounters do not need their product.

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