Factory gate pricing contracts will cover two-thirds of Tesco's volumes by February, as the company steps up its primary distribution drive.
Logistics and IT director Philip Clarke told The Grocer Tesco was now "well into the implementation phase" on fgp with several large branded suppliers that had initially been sceptical ­ with both parties seeing the benefits.
However, the biggest wins were in taking over primary distribution from small and medium sized suppliers, said Clarke. "They are not experts at buying and operating transport. We are. I have my own fleet to utilise, and I can also buy transport on the secondary markets at good rates."
Before Tesco started its fgp drive, its 13 metre trucks capable of holding 26 pallets were handling on average 22.5 pallets. "Now we are handling 24 ­ and we haven't finished yet." Taking control of inbound supply had also vastly improved service levels to RDCs, he said.
The success of continuous replenishment (CR) ­ wave deliveries of ambient goods into stores twice a day ­ had convinced Tesco to extend it to fresh, he added. This would reduce inventory in the supply chain, notably in store backrooms, and improve availability.
All replenishment at Tesco would now go through a single system, which store staff would be able to tap into via new handheld terminals or "intermecs" developed by Microsoft and IBM, said Clarke.
"These will go into all our stores in the next 20 weeks, putting our entire CR system on to the shelf edge." Staff will be able to scan in products, find out how many are in stock, and when new orders are coming in.
Meanwhile, a clothing depot will open at Daventry in August, freeing up space at existing depots for other non-food lines.

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