The message from Sainsbury on factory gate pricing was equally uncompromising. Yes, the supermarket chain had been keen from day one to work with suppliers to ensure its initiative was as collaborative as possible. But Richard Dickson, Sainsbury's senior manager, supply chain development, made it clear collaboration did not mean the multiple would be an easy touch. "We will be sympathetic but engagement in this process is not optional," he warned suppliers at the conference. The reason was simple, said Dickson: factory gate pricing was a key part of his company's ongoing efforts to re-engineer its supply chain. "It is the final piece in our jigsaw," he added. Dickson explained that Sainsbury was attempting to create a fully integrated network that would allow it to maximise efficiency at every stage. And the way to do that was by thinking in terms of an "end to end" supply chain ­ not by "optimising in silos". That meant suppliers needed to work with Sainsbury to help remove activities that were of no benefit and added no value to consumers. Dickson explained: "Factory gate pricing at Sainsbury is all about efficiency and it's that efficiency which drives our solutions. There are a whole range of levers that can be pulled to make the supply chain more efficient." Sainsbury piloted its initiative with six suppliers from across its business in order to fine tune its approach. It has developed a process that can take between seven and 23 weeks to implement. Step one is where the costs and timings of the existing route to market are identified. Step two sees Sainsbury and its supplier evaluating different options to optimise that route to market. And step three is all about implementation. So far, 200 suppliers have been through that process. And they all came on board "willingly" it seems. In principle factory gate pricing sounds simple but making it happen, as Dickson readily admits, is a bit like rocket science. "The process of attempting to synchronise multiple supply chains with all their variables is difficult, but by no means impossible. We fully appreciate all these complexities and we have structured our roll out accordingly. Our roll out means we will be stepping it up substantially next year." He urged suppliers to understand their distribution costs and work with Sainsbury so both parties could lock their supply chains together to create more effective and more efficient businesses. And for those suppliers who still don't want to join the party, Dickson had a final parting shot: "Retailers and suppliers are all about change. If you influence change you can make it work for you. If not you will be hit by a tidal wave." {{COVER FEATURE }}

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