Tesco has asked suppliers to give it more shelf life on key chilled lines as part of its bid to be ‘number one for availability’.
The initiative - which was first mooted at a meeting with chilled suppliers in the spring - follows moves to simplify the promotional programme on fresh food and improve instore efficiency in order to drive on-shelf availability.
Contracts up for grabs in some lines now specify that suppliers should provide 75% shelf life as part of the product specification, according to suppliers.
This means that if a product has a total shelf life of 12 days, Tesco wants nine of them.
This would effectively force suppliers to move to a just-in-time manufacturing schedule to supply Tesco with product straight off the production line, according to one small dairy supplier.
“This is a walk in the park if you are on five-day-a-week production. But we’re not. This might be more efficient for Tesco, but it’s not for us.”
A large branded and own label supplier added: “Tesco has definitely upped the ante on this in the last six weeks.
“It’s not a problem on the core lines but on the smaller lines, where you might have a twice-weekly production run, or less, in order to maximise efficiency, it could be.
“On the one hand you are hammered for non-delivery on service level targets, and on the other, they are expecting you to take on more risk and handle shorter levels of stock.”
Tesco’s automatic replenishment system works on what has been sold, what is left on shelf and the minimum shelf life of the product, the supplier added. “The more shelf life there is to play with, the more the system can order as there is less risk of wastage.”
He added: “We try to keep as much shelf life as we can, so that we can pick from stock, maximise efficiency at our end and maintain a good service.
“We understand why Tesco is doing this, but as usual, it is at a price.”
Tesco was unavailable for comment.
The initiative - which was first mooted at a meeting with chilled suppliers in the spring - follows moves to simplify the promotional programme on fresh food and improve instore efficiency in order to drive on-shelf availability.
Contracts up for grabs in some lines now specify that suppliers should provide 75% shelf life as part of the product specification, according to suppliers.
This means that if a product has a total shelf life of 12 days, Tesco wants nine of them.
This would effectively force suppliers to move to a just-in-time manufacturing schedule to supply Tesco with product straight off the production line, according to one small dairy supplier.
“This is a walk in the park if you are on five-day-a-week production. But we’re not. This might be more efficient for Tesco, but it’s not for us.”
A large branded and own label supplier added: “Tesco has definitely upped the ante on this in the last six weeks.
“It’s not a problem on the core lines but on the smaller lines, where you might have a twice-weekly production run, or less, in order to maximise efficiency, it could be.
“On the one hand you are hammered for non-delivery on service level targets, and on the other, they are expecting you to take on more risk and handle shorter levels of stock.”
Tesco’s automatic replenishment system works on what has been sold, what is left on shelf and the minimum shelf life of the product, the supplier added. “The more shelf life there is to play with, the more the system can order as there is less risk of wastage.”
He added: “We try to keep as much shelf life as we can, so that we can pick from stock, maximise efficiency at our end and maintain a good service.
“We understand why Tesco is doing this, but as usual, it is at a price.”
Tesco was unavailable for comment.
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