Tesco is smoothing out how it pays suppliers by rolling out a system that relies on good faith.
The Good Faith Receiving auditing system essentially assumes most suppliers’ inbound deliveries are accurate, ensuring payments are on time, rather than delayed due to disputes over volume or condition of stock. Discrepancies are then dealt with later, often on a quarterly basis.
An initial trial has led to both improved delivery accuracy and on-shelf availability in Tesco stores and the retailer is now understood to be rolling out the system to a much larger number of its chilled suppliers. Deliveries will be checked on a sample basis by an independent third party, The Grocer understands.
Many of Tesco’s supermarket rivals have been using GFR for several years. Sainsbury’s, Morrisons and Asda introduced it in 2017, while Co-op and Waitrose followed suit a year later. The moves by Morrisons, Asda and Co-op followed pressure from then Groceries Code Adjudicator Christine Tacon, who cited a report from consultancy Simply Supply Chain showing 20 leading chilled suppliers were being deducted £15m a year between them by supermarkets for alleged discrepancies in their deliveries.
Tesco was not a target of the criticism and was recently ranked number-one in the Advantage supplier survey for the ninth consecutive year.
This issue of late payments was raised again by current GCA Mark White at a conference in London earlier this month. White revealed that in his 2024 supplier survey, 14% of those questioned had experienced a delay in payments in the past year, down one percentage point from the previous year but “still too high”, he said.
White recognised that retailers were introducing processes to improve their goods-in processes, including introducing GFR. However, he warned the implementation of such changes could lead to friction.
“Whenever they are implementing any type of change, the retailers should be speaking to suppliers before, during and after a change has been implemented to understand the suppliers’ experiences adapting to the change and any concerns,” he said.
“Communications explaining new processes and procedures need to be precise and easy to follow.
“There should be escalation routes for suppliers to raise concerns and I encourage the retailers to consider soft launching changes and being willing to slow down the implementation if they come across any issues.”
The Grocer understands Tesco suppliers will have the choice to opt in or not. The retailer has also created a dedicated GFR team that will support suppliers through the switch via webinars and site visits.
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