Tesco puts its success down to supplier management

20 April 2010

20 April 2010 | Nick Martindale

Closer supplier relationships helped Tesco increase profitability by 10 per cent, according to figures released this morning.

In its annual report Tesco said vendor relations had helped “deliver a stronger range and better shopping experience for customers”.

Consolidating spend with suppliers across Europe also contributed to a strong performance in clothing sales, which grew 14 per cent on the back of buoyant trading in 2008, in what has been a declining market overall.

“Joint buying – whereby 95 per cent of the supplier base in Central Europe is the same as Ireland and the UK – has brought the benefits of group expertise and scale, helping to improve quality and costs,” the report said.

Tesco also reiterated its commitment to treating suppliers fairly and securing long-term deals. “By investing for the long-term in businesses that understand our needs, our customers benefit through better products and workers benefit through more stable and secure jobs,” the report said. “A third of our suppliers have been with us for at least five years and we are seeking to grow this proportion.”

The business has recently launched its Trading Fairly Awards for produce and clothing suppliers, which reward companies for improving working conditions, and has appointed ethical action managers in South Africa and Bangladesh.

It also pledged to support local businesses by selling regional products where possible.

Tesco reported annual pre-tax profits of £3.176 billion for the year to 27 February.

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