Research from the IGD suggests suppliers will be caught out as Tesco and Sainsbury introduce factory gate pricing in Scotland.
Half of suppliers who took part in the research commissioned by Scottish Food & Drink had minimal or no knowledge of factory gate pricing. Only 13% were engaged in it and they all supplied Tesco or Sainsbury. However 46% had been contacted by one or more retailers with a view to implementation. Tesco alone had been in contact with 90% of them.
Scottish Food and Drink logistics project manager Heatha Anderson said the organisation was setting up logistics forums to educate suppliers.
Those who took part in the survey did not appear to understand questions related to distribution costs, she said. They were, therefore, likely to suffer because of poor cost analysis and in negotiations with retailers introducing the regime. She added: "They should take steps now to address this."
The research also showed 12% of retailers and suppliers did not share any performance details, so suppliers did not know how sales were performing by store for forecasting.
Half of suppliers were ill informed on backhauling, where vehicles pick up additional goods when returning from making a delivery, and only 20% were engaged in it, at low levels.
A separate IGD report on factory gate pricing, released last week, said factory gate pricing was improving communication, development and availability for retailers and for participating suppliers.
Factory gate pricing is bringing a transparency to the supply chain through open book costing, which would eventually in all areas of bringing a product to market, said the report, "Factory Gate, Open Book and Beyond"
IGD senior business analyst Tarun Patel said: "There are substantial benefits to suppliers in developing transparent relationships with customers. They can use it to lock in their customer, decreasing costs, disclosing risks and creating a much stronger personal relationship."
Factory gate pricing, where when returning an empty vehicle to distribution centre, is geared towards driving down distribution costs and increasing supply chain efficiency.

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