Britain's largest supermarket Tesco has "seriously breached" a legally-binding code to protect grocery producers by prioritising its own finances over the fair treatment of its suppliers, a new report has found. Professor Janet Godsell, of WMG at the University of Warwick is available for expert comment.
Professor Godsell's research focus is on the way that product, marketing and supply chain strategy align to create a responsive or demand-driven approach to supply chain management.
Her thoughts are:
- Tesco’s over-focus on operating margin is potentially at the root cause of the issues
- Whilst it is good to have a strong strategy it can be an over-played strength
- There was too much focus on this metric at the expense of the broader supply chain
- This drove a deep culture within the buying function within Tesco
- With retail the ’Tesco buyer’ phenomena has affected the sector more broadly
- This will require a more balanced strategic focus, and change in leadership within Tesco’s to truly change
- In a low margin business like retail, operating margins are more likely to be increased by an EDLP (Every Day Low Price) like Aldi and Lidl (where Tesco started)
- The high degree of promotional activities that Tesco’s introduced will have exacerbated the situation, and made managing the supply chain and the liklihood of errors greater. They also passed the risk onto the suppliers
- It’s a long road ahead for both Tesco and the broader retail sector to change their culture
- To do so they need to take a broader supply chain perspective
- They are in a unique and powerful position as the intermediary between consumers and suppliers. They have a responsibility to do this in a ethical and fair way that ensures a fair return to all across the supply chain.
Tel: 02476 150423
Mob: 07876 218166