Sir; I find it absolutely incredible that Tesco's director of supply chain development Barry Knichel can be quoted as saying "it is highly unlikely that we'd do auctions on Tesco Finest products" when they have done exactly that in one of the categories in which we operate (Hitting the Floor, The Grocer, July 6, pp34-5). Imagine our surprise and concern when the price appearing on the system was lower than the cost of the constituent ingredients with no room to cover costs such as labour fixed costs or overheads, let alone allow a margin for the manufacturer. While we recognise the need to be competitive and that retailers will improve margins in the short term, the main concern must be how much this will shake up the grocery industry. How can an incumbent manufacturer be expected to retain business when inevitably they will be competing with other businesses prepared to take on additional volume at a marginal cost, with fixed costs and overheads already covered? It will lead to a shake out of manufacturers and the survival of the fittest, but I look forward to the day when I can auction my capacity to the highest bidder. That's what I call a reverse auction! Name and address supplied {{LETTERS }}

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