Asda needs to get rid of around a third of its underperforming produce suppliers according to its category boss.
Despite chief executive Andy Bond’s recent calls for “flair and not fear” from suppliers, Nick Burr, business unit director for produce, said that, while in general, the retailer had good relationships with its suppliers, there was still room for improvement.
He said it could divide its supplier base into thirds. “A third of our suppliers are probably the best in the country and can’t do enough for us. If a store runs out of produce, they’ll jump in a car to drop some supplies off, they’re superb.”
While relations with the middle third were “stand-offish”, he said the bottom third is more of a problem. “These are the suppliers which we need to get rid of. I’m not talking about stripping out, we just need to replace a third of them. These people are not growers - we’re talking about the middlemen.”
Despite this, he said the supply base had improved considerably: “Service and quality are much better than they were two years ago.”
Part of that is down to the development of Asda’s relationship with International Produce, the marketer responsible for sourcing all its imported produce. “It just works,” said Burr (pictured). “It makes life so much easier for us. We’ve had some teething problems but it’s fair to say they’re on top of it.”
The decision to go to a single source for its imports raised eyebrows at the time, he agreed: “There was a lot of anguish over whether it was the right thing to do, but that’s been dispelled. In terms of benefits it has delivered reduced costs, quality is up and we now have improved availability.”
He said the success with IP could lead to a similar arrangement for its UK produce sourcing operations. “The argument is could we do the same for our British sourcing? That’s a discussion we’re having.
“At the moment, we probably have around 26 middlemen on the UK side. Do you need 26? Probably not, but then just having one is probably not enough. We need to get somewhere between the two. We’re discussing that, but is it going to be in the next 18 months to two years? Probably not.”
He said Asda wants to continue to work with IP to ensure it is exactly where it wants the marketer to be before it attempts anything similar on the UK side.
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