Tesco.com - Competition Commission

Working with suppliers

Dairy farmer Michael George

At Tesco we believe in working closely with our suppliers.

That is one of the reasons why we are opening five new regional buying offices around Britain. These offices will increase the number of our local suppliers and make it easier for smaller companies to sell their products through Tesco. The result of this will be hundreds of new lines being stocked in Tesco stores and more business for small suppliers.

We are also introducing regional counters in some of our stores to promote British food in season. And we will make our locally produced products easier to find with clearer labelling.

It is through our commitment to our suppliers that we are now able to offer our customers over 7,000 local products in our stores and have plans for even more. And it helps to explain why last year we sold more home grown apples and strawberries than any other supermarket in the UK. 90% of the fresh chickens we sell are British, and the same is true for 95% of the fresh beef, 92% of the fresh pork, 80% of the fresh lamb and 100% fresh eggs & milk that we sell.

So that we continue to build new contacts with potential suppliers in the regions we are also hosting a series of regional road shows. These road shows are providing smaller producers the opportunity of getting together with our senior buying teams and will help us to achieve our objective of getting hundreds more locally produced lines into our stores.

Our supplier partnering approach

Our success depends on the success of our suppliers. By forging long-term partnerships with our suppliers and identifying new innovative suppliers we are able to constantly broaden and improve our product range.

One of our principal company values to 'treat people the way we want to be treated' drives our behaviour. As a result, our supply base is distinguished by its long term constructive relationships. We have over 1,500 suppliers who have been working with us for five years or more, and many who have been with us for decades.

It is our aim to offer our customers the best value and to give our suppliers a fair price for their produce. This way our suppliers make the profits they need to invest in the innovation and new products that we want to offer our customers. At its best, this forms a virtuous circle in which customer, supplier and Tesco all benefit. In our effort to achieve this we work with our suppliers to help them improve their processes and efficiency, throughout the supply chain.

For example, a recent study by The Food Chain Centre showed when we share our customer insight with our suppliers it has helped them become more efficient and their business grew. Another example is our involvement in an initiative to improve the efficiencies in the sausage supply chain, all the way from the farm to supermarket shelf. Using a team drawn from every stage of the pork sausage supply chain we aim to identify and help implement improvements that companies could not achieve working alone. This will result in a better deal for suppliers and customers.

Our relations with suppliers are not just governed by our principles and policies, but also the Supermarkets’ Code of Practice. In 2004/2005 the Office of Fair Trading audited the Code and found no evidence of any breaches by Tesco. Beyond the price that we pay for their goods, suppliers can also count on the fact that we pay promptly, we repeat business if quality is maintained and we provide the kind of partnerships which help our suppliers to improve their businesses through greater efficiencies and more effective processes.