Focus on Supply Chain
Tesco had continued to invest in stock management and planning systems, steadily developing closer links with suppliers and growers to improve asset utilisation, on shelf availability and the freshness of the products. By the mid- 1990s fresh produce could go from field or producer to shelf within 24 hours. Whilst Tesco was importing fresh produce from every corner of the globe, the amount of local produce was also increasing. All milk and eggs came from home suppliers, whilst the volume of British grown fruit and vegetables increased to the point where Tesco accounted for one quarter of the entire UK market.
Gradually, the company was shifting to a policy of closer working with suppliers, encouraging innovation so that products traditionally purchased abroad could be produced in the UK. New regional contracts provided Tesco suppliers with greater financial security and encouraged investment in new farming practices and new technology. Other examples of more direct supplier co-operation included the opening of a factory in Cheshire, built specifically to supply Tesco with ready-made Italian chilled meals and the trialling of a new computer programme which uses weather information to predict crop growth up to ten weeks in advance, allowing planned price promotions and further reducing waste.
In 1996, Tesco's Supply Chain Development Director, Graham Booth, had taken up the position of Co-Chairman of the ECR5 UK Strategy Group, the Group being the UK arm of a Europe-wide industry body of suppliers, distributors and retailers, set up to improve the efficiency of the grocery sector as a whole. Booth went on to become one of the most outspoken advocates of greater co-operation
between Tesco and its trading partners. His influence was clearly visible in April 1997, when Tesco called its top 300 to 400 suppliers to a meeting in Birmingham. To the surprise of the suppliers, Tesco announced that it was ending the practice of 'copycatting'6 manufacturers' brands and that the suppliers' endless pleas for in-store data about their brands' performance would be granted. The company went on to issue a formal invitation to the suppliers to put the adversarial trading practices of the past behind them and find new ways to work together. Clear logic was behind the move. Tesco recognised that it could improve its overall offer to consumers through strategic category management. Moreover, its best chance to do so was to tap into the consumer insight and marketing expertise of its branded suppliers through joint marketing programmes.
There were three significant conditions attached to the proposed arrangements. First, instead of turning out own-label look-alikes of branded manufacturers' products, Tesco invited the manufacturers to collaborate in the redesign of its own-label range. Second, in exchange for access to sales data, the retailer