A year ago this month, Tesco launched a ground-breaking supply chain initiative. The move towards 'primary distribution' was a major - but logical - next step in the development of the company's supply chain. The aims were to make life simpler for the supplier, deliver lower prices to customers and give new opportunities to efficient distributors, while creating a leaner, more visible supply chain.
The concept of primary distribution (or factory gate pricing) is simple. By working in partnership with our suppliers we are moving towards a system where goods are collected by Tesco, or by appointed carriers, from the factory gate, with manufacturers charging for the price of the product, excluding delivery.
Tesco continues to lead the way in primary distribution. We started with our frozen foods suppliers and now 90% are on board. We have also been working with our ambient grocery suppliers and are now starting to roll out to fresh produce suppliers. Nearly 500 suppliers are working with us on this innovative initiative  this represents over 20 million cases a month.
The latest IGD research shows that 72% of people who take part in factory gate pricing have had a positive experience of the process. For Tesco, at least, these high satisfaction levels testify to the way we have been working in partnership with our suppliers to introduce this system at a time and pace that suits both parties.
When we started to talk to our suppliers last year, some expressed concerns and were sceptical. So we have spent time with them  individually and in workshops  and we have listened to them. This collaborative approach has enabled us to lay solid operational foundations and demonstrate that this new system works  and our suppliers have seen the benefits.
They are able to focus on manufacturing products, making their job simpler. They also benefit from having better availability of their products in-store. Tesco benefits from higher service levels, reduced administration, and streamlined regional distribution centre operations with inbound traffic. We all gain from a leaner and more visible supply chain.
Customers benefit from improved availability and, with the savings that are made through primary distribution, they also benefit from lower prices in-store. Over the last five years Tesco has invested over £1.2bn in lowering prices. We have been able to do this by making efficiencies across the business and the supply chain is a significant part of this.
There are also major environmental benefits. As the UK's leading retailer, with 730 stores, we are committed to helping protect the environment. By utilising empty lorries when they are returning to our distribution centres after delivering at stores, we can significantly reduce the amount of lorries on the road and reduce pollution by using less diesel. All lorries in the Tesco fleet run on ultra-low sulphur diesel and are fitted with kits to reduce fuel consumption.
There are new opportunities for efficient distributors. The consolidators Tesco has recently appointed are Reed Bordell and Christian Salvesen for all consolidated frozen foods; Fowler Welch, Cool-Chain and Corby-Chill for portions of the fresh food network, and Tablogix for a portion of the ambient network. Tesco is working in partnership with over 100 carriers in addition to its own fleet.
Through forums and user-groups we are working to identify better, simpler and more efficient ways of working together to provide benefits for all parties. This is delivering better customer service for our regional distribution centres.
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The concept of primary distribution (or factory gate pricing) is simple. By working in partnership with our suppliers we are moving towards a system where goods are collected by Tesco, or by appointed carriers, from the factory gate, with manufacturers charging for the price of the product, excluding delivery.
Tesco continues to lead the way in primary distribution. We started with our frozen foods suppliers and now 90% are on board. We have also been working with our ambient grocery suppliers and are now starting to roll out to fresh produce suppliers. Nearly 500 suppliers are working with us on this innovative initiative  this represents over 20 million cases a month.
The latest IGD research shows that 72% of people who take part in factory gate pricing have had a positive experience of the process. For Tesco, at least, these high satisfaction levels testify to the way we have been working in partnership with our suppliers to introduce this system at a time and pace that suits both parties.
When we started to talk to our suppliers last year, some expressed concerns and were sceptical. So we have spent time with them  individually and in workshops  and we have listened to them. This collaborative approach has enabled us to lay solid operational foundations and demonstrate that this new system works  and our suppliers have seen the benefits.
They are able to focus on manufacturing products, making their job simpler. They also benefit from having better availability of their products in-store. Tesco benefits from higher service levels, reduced administration, and streamlined regional distribution centre operations with inbound traffic. We all gain from a leaner and more visible supply chain.
Customers benefit from improved availability and, with the savings that are made through primary distribution, they also benefit from lower prices in-store. Over the last five years Tesco has invested over £1.2bn in lowering prices. We have been able to do this by making efficiencies across the business and the supply chain is a significant part of this.
There are also major environmental benefits. As the UK's leading retailer, with 730 stores, we are committed to helping protect the environment. By utilising empty lorries when they are returning to our distribution centres after delivering at stores, we can significantly reduce the amount of lorries on the road and reduce pollution by using less diesel. All lorries in the Tesco fleet run on ultra-low sulphur diesel and are fitted with kits to reduce fuel consumption.
There are new opportunities for efficient distributors. The consolidators Tesco has recently appointed are Reed Bordell and Christian Salvesen for all consolidated frozen foods; Fowler Welch, Cool-Chain and Corby-Chill for portions of the fresh food network, and Tablogix for a portion of the ambient network. Tesco is working in partnership with over 100 carriers in addition to its own fleet.
Through forums and user-groups we are working to identify better, simpler and more efficient ways of working together to provide benefits for all parties. This is delivering better customer service for our regional distribution centres.
{{COMMENT - GUEST }}
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