Ten years ago, Tesco was losing sales. Jason Tarry – now the newly appointed chairman at JLP – was put in charge of the buying teams as chief product officer. He faced a problem: after years of sustained abuse, no suppliers trusted anything Tesco said and had withdrawn their investments.
I had called this out in the press, so Tarry contacted me to discuss his dilemma. He needed supplier investment and was all set to sell the opportunity in the annual supplier conference, when he noticed that the slides on growth plans and supplier partnerships were exactly the same as the ones used in previous years. The only difference was that this time, those slides meant what they said.
He asked me if Sentinel would run a Tesco supplier training programme. What followed was one of the best examples of collaboration I’ve seen in over 30 years of working in fmcg.
In regular meetings, the Tesco strategic team shared with me all of their directions, methodologies and systems. They explained to me how data would drive logical decisions, rather than in-store coherence being messed up in pursuit of the supplier dollar. This training initiative persuaded suppliers that Tesco had turned over a new leaf, and was trustworthy.
The supplier dialogue with Tesco buyers became more strategic. Investment followed and honourable commitments replaced settlement wrangling. Negotiation became far more subtle – avoiding complacency, creating challenge and steering clear of one-off pressures. The results speak for themselves. Despite being the biggest UK supermarket, and having the clout to go with that, Tesco has consistently shown improving results in the GSCOP league table and solid sales performance too.
The UK’s GSCOP is viewed worldwide as a framework to create fairness in negotiations. The framework provides a stick to push collaboration, when actually, the carrot should have been enough all along.
Too many retail buyers believe the best way to extract funds from their suppliers is to bully, pressurise and threaten. Fewer see that integrating suppliers, being trustworthy and developing mutually beneficial strategies derives much larger investment pots in the longer term. Powerplay approaches are often accompanied by layers of protocols to loosely justify charges and penalties.
The truth is that, although major suppliers can be fooled once or even twice, subsequently they find a way to thrive in the end – even if it’s by pushing through price increases and inflation. Smaller companies may not have this capability, but neither do they have the budget to rock the retailer’s world. Pushing them out of business stifles innovation and strengthens the big brands, thereby worsening the buyer’s position.
If buying organisations understood the power of trust and collaboration in the longer term, more would go that way. GSCOP wouldn’t even be necessary. It seems a shame that the easy route to short-term money clouds this obvious fact.
Tarry’s approach didn’t do his career any harm either, as his latest appointment at JLP shows. Good luck in the new role, Jason Tarry – give us another case study for collaboration, please.
Article & Image Source: The Grocer
