Tesco plans to increase its volumes through factory gate pricing from 66% to 75% within the next 12 months.
Supply chain director Stuart Ross told suppliers at the IGD Supply Chain Transformation conference that he expected 15 million cases per week to pass through Tesco’s primary distribution system in the next year. It currently stands at 13 million cases.
Factory gate pricing has produced a 14% improvement in delivery on time at Tesco, said Ross, which had improved availability and minimised stock holding. He said its supply chain was now more responsive to changes in customer demand.
However, he added further progress was required to improve availability, reduce turnaround time at depots, and make life simpler for staff. We really have to find ways of eliminating a waste called time,” said Ross.
Unilever Bestfoods company distribution manager Maura Welch described the experience of factory gate pricing with Tesco as “a long and sometimes painful journey”. UB began a trial with one ambient depot and three Tesco distribution centres in March 2002 and rolled it out in February 2003.
“Performance, on the whole, is good and Tesco is working hard to improve,” said Welch.
And she added that now, after two years, Tesco was hitting key performance targets.
But Welch said the impact of working with Tesco meant it had increased drops to other retailers to hit on-time targets.
This could result in more trucks going out half-empty.
Unilever plans to roll out its chilled trial with Tesco, which started last year, within 12 months.
Sean McAllister