Asda has rolled out factory gate pricing contracts with 74 chilled and frozen suppliers as it takes more control over its primary distribution network.
General manager, trading business improvement Derrick Keating said Asda was now handling significant volumes through factory gate contracts.
Asda has spent months building an infrastructure to support factory gate pricing, he said. “We are working with hauliers including NFT, Reed Boardall and Pall-ex. However, we will use our own secondary fleet as and when.”
Although smaller suppliers were in many cases already using third parties to consolidate volumes bound for several retailers, Asda wanted to
make its inbound supply chain more responsive by working with hauliers to consolidate Asda-only volumes, he said. “We want goods to go to us, quickly - not via other retailers’ depots.”
Greater control and visibility over its inbound supply chain
would also enable Asda to keep better track of inventory and plan the movement of goods through its distribution system more efficiently, he added.
“We are also enabling some suppliers to access supply chain information such as goods being booked into our RDCs via Retail Link. They can then draw up accurate invoices based on what has arrived, instead of having to re-send invoices when what was ordered doesn’t match what was received.”
Several suppliers working with Asda on factory gate pricing for chilled and frozen were now asking about opportunities in ambient, he said. “Demand will increase over time as things like the working time directive and rising fuel costs mean we will all have to work harder to make the supply chain as efficient as possible.”
However, factory gate pricing would in no way become a condition of doing business with Asda, he stressed. “If we can’t add value for a supplier, they won’t do it.”
Elaine Watson