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Trust and simplicity is the key to successful partnerships with suppliers

Dave Lewis

Group CEO
UK

26 Jan 2016

For the last 15 months we’ve been working hard to make changes putting customers back at the heart of our business. These changes come against the backdrop of a review we undertook in 2014 into certain historic practices that were both unsustainable and harmful to our suppliers. We shared details of these practices with the Groceries Code Adjudicator, whose report was published today.

How we're rebuilding trust with our suppliers

At Tesco, our absolute focus is on serving our customers, so for the last fifteen months we’ve been working hard to put customers right back at the heart of the business. We’ve made our prices simpler, put more colleagues in shops and improved the availability of the everyday products our customers rely on.

The changes we have made come against the backdrop of a review we undertook in 2014 into certain historic practices that were both unsustainable and harmful to our suppliers. We shared details of these practices with the Groceries Code Adjudicator, whose report was published today.

The investigation by the GCA was thorough and professional, and we accept the report’s findings, which are consistent with our own investigation.

However, today’s report looks back at historic practices, and Tesco today is a very different business.

For example, the report refers to a time when there was an absolute focus on operating margin, which had damaging consequences for the business and our relationship with suppliers. This has now been fundamentally changed.

"We are on a journey to rebuild trust. We have made a lot of progress, but there is still more we can do."

In January 2015, we drew a line under our past and we reset the business. We refocused on new performance measures and we reorganised and retrained our teams. Specifically, to address the issues raised we have fundamentally changed the way we operate and implemented 14 significant initiatives that improve the way we work with suppliers, our commercial culture and simplify how we buy and sell.

For example, we completely reorganised our Product team, changed to measuring sales and profit rather than margin rate, putting the focus on what the company sells rather than what it buys. We also became the first UK retailer to publish its payment terms with its suppliers.

Today’s GCA report recognises that an ‘overwhelming majority of suppliers’ see their relationship with us more positively today, and that’s what I hear as I visit suppliers.
 We are on a journey to rebuild trust. We have made a lot of progress, but there is still more we can do.

Serving customers a little better every day is the core purpose of our business. We simply cannot do that without trusted partnerships with our suppliers and the commitment of a great team of colleagues.

I’m really proud of the way my colleagues and our suppliers have responded to the changes we have made over the last 15 months.  Recent results show that our customers are noticing the difference – they’re enjoying better service and buying more of what they need at Tesco.

 

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