Working with suppliers
We value long-term relationships and have more than 1,500 suppliers with whom we have been working for five years or more. In many cases where suppliers have been working with us for a shorter period, it is because they are supplying new products to our shelves. We are committed to sharing customer views with suppliers as well as listening to suppliers to understand their perspective. For example, during 2007 we developed a system in the UK called TescoLink through which suppliers can access data such as store level sales of their products.
We have regular dialogue with our suppliers and try to develop confident and honest relationships so that concerns can be resolved and we can work together effectively. We also use formal processes to understand suppliers' views and identify how we can work together better.
We carry out an anonymous survey, called Viewpoint, to understand what suppliers think of us and identify areas for improvement across the business.
For example, we used Viewpoint to survey 200 suppliers in South Korea in 2007. They ranked us first of their three leading customers and said we were strong on fairness in work processes, communications, information sharing and trust in trading. We identified areas of improvement, which are reflected in our 2008 Community Plan projects.
UK Competition Commission Inquiry
In 2007 and 2008 the Competition Commission continued its investigation into the grocery market, including the relationship between retailers and suppliers.
The Commission provisionally found that trends in supplier investment and product innovation in the grocery supply chain were positive. It provisionally found no systemic problems with the financial viability of UK suppliers. The number of small suppliers was found not to be decreasing and the Commission did not identify barriers preventing new suppliers from entering the market or existing suppliers from expanding.
Tesco supports the Competition Commission's proposals to extend the Supermarket Code of Practice to a wider range of retailers, which will help provide a level playing field across the industry. It will also help suppliers to have more relationships that are governed by the Code.
During the investigation the Competition Commission examined correspondence between retailers and suppliers. Its provisional findings found no systematic abuse of the supplier relationship. In fact, they found examples of best practice.
The UK Office of Fair Trading (OFT) issued a statement of objections in September 2007 stating that there had been collusion between supermarkets and dairy processors on the retail prices of some dairy products in 2002 and 2003. We reject any suggestion that we have fixed prices or damaged the interests of our customers and are defending the case vigorously. We always try to act in the best interests of consumers.