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What burgers have taught us, it says on one page of the national newspaper. On the other page there is some short copy assembled like a poem. It even reads like a poem:
“The problem we’ve had with some of our meat lately, Is about more than burgers and Bolognese.”
Tesco chief executive Philip Clarke visited the National Farmers Union conference to promise that its approach to the supply chain had changed and that it wanted to “bring food closer to home” and to “have a better relationship with farmers”. He even sent me an email to confirm this. And the poem ended: “We are changing.”
Later on March 1, I was sent an email by Mark Price, managing director of Waitrose. It was less poetic and he too promised an even shorter supply chain. The next morning, listening to farmers talking to the BBC, they were torn because the sort of longer term deals on offer from the supermarkets were very difficult to price. As the Economist says, the challenge is to build dedicated supply chains based on long contracts and close collaboration. But in its view the grocery channel has not been strategic about building supply chain advantage, instead forever seeking the lowest price.
However, low price is the strategy. Supply chain is a source of competitive advantage for Tesco and for Wal-Mart. All Wal-Mart makes, wrote Thomas L Friedman in the World is Flat, is a “hyperefficient supply chain”. Friedman quotes Yossi Sheffi, an expert from MIT, who says: “Making stuff – that’s easy. Supply chain, now that is really hard.” Building a process that delivers stuff across the globe – involving dozens of suppliers, distributors, port operators, customer brokers, forwarders, and carriers in a finely-tuned chain operating in concert – is not only difficult, it is very, very hard to duplicate.
Consumers love supply chains because they deliver all sorts of stuff at lower and lower prices. Wal-Mart focused relentlessly on three things. Getting manufacturers to cut their costs as much as possible. Getting cost out of the supply chain. And getting great information so they would always have the right stuff on the shelves at the right time.
Tesco is world class at supply chains. So farmers are correct to be wary of its new warm embrace. But c-store retailers need to be wary too. Tesco seems to sense an opportunity to move its provenance credentials up a notch. It is aware of the competitive advantages that local retailers have to “bring food closer to home” and the opportunity for local shops to build sales as consumers shop closer to home.
The last issue of Retail Express talked about a wake-up call fro
m the rise of M-Local. I believe Tesco’s “horsemeat” advertisements are a wake up call too! Tesco sees an opportunity to leverage its supply chain know-how to give it an edge over local shops.
Writing to Retail Express, retailer Atul Sodha said that very few suppliers had been in touch to reassure him about the quality of his offer. Progressive independent retailers deserve some poetry so they know they can compete.
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