Dalepak to Fox’s Biscuits maker Northern Foods has asked suppliers for retrospective discounts for 2003 as part of a cost reduction programme.
Finance director Sean Christie said Northern Foods’ subsidiaries were talking to suppliers about the way forward. The company planned a “dramatic cut” in the number of suppliers it used across its business units as it moved towards central buying. The group would cull suppliers in an ongoing process of taking costs out of the business.
He said: “We are looking to have fewer suppliers doing more business. We have thousands of suppliers - we may have 30 suppliers of the same thing, when we only need two or three. This reduction will be across the board.”
A supplier of Northern Foods subsidiary Solway Foods alerted The Grocer to the crackdown on costs this week. In an anonymous letter, the supplier claimed Northern Foods chairman Peter Blackburn had set a target of £2m income recovery from suppliers in 2003, following three profit warnings.
The letter reported: “Northern Foods called in each of its suppliers, granting them 15 minutes per interview. We were told that unless we paid 3% retrospective discount on all our sales to Northern Foods in 2003, we would not be considered for future supplies in 2004.”
One analyst said Northern Foods was right to reduce its supply base.
He added: “Northern Foods is talking tough to its suppliers, it is obviously trying to weed out ones that will not play ball.”
Northern Foods held meetings with analysts this week ahead of its financial year end on March 31.
Anne Bruce
Finance director Sean Christie said Northern Foods’ subsidiaries were talking to suppliers about the way forward. The company planned a “dramatic cut” in the number of suppliers it used across its business units as it moved towards central buying. The group would cull suppliers in an ongoing process of taking costs out of the business.
He said: “We are looking to have fewer suppliers doing more business. We have thousands of suppliers - we may have 30 suppliers of the same thing, when we only need two or three. This reduction will be across the board.”
A supplier of Northern Foods subsidiary Solway Foods alerted The Grocer to the crackdown on costs this week. In an anonymous letter, the supplier claimed Northern Foods chairman Peter Blackburn had set a target of £2m income recovery from suppliers in 2003, following three profit warnings.
The letter reported: “Northern Foods called in each of its suppliers, granting them 15 minutes per interview. We were told that unless we paid 3% retrospective discount on all our sales to Northern Foods in 2003, we would not be considered for future supplies in 2004.”
One analyst said Northern Foods was right to reduce its supply base.
He added: “Northern Foods is talking tough to its suppliers, it is obviously trying to weed out ones that will not play ball.”
Northern Foods held meetings with analysts this week ahead of its financial year end on March 31.
Anne Bruce
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