Offer us your ‘best price’, Boparan tells suppliers, as around half face chop

By Ben Bouckley

- Last updated on GMT

Offer us your ‘best price’, Boparan tells suppliers, as around half face chop

Related tags Supply chain

Northern Foods/2 Sisters Food Group began meeting suppliers yesterday, with the professed aim of shedding around half ‘‘over time’’ in a bid to boost supply chain efficiency and increase turnover to £3bn by 2015.

A Northern Foods spokesman said that new owner Ranjit Boparan (pictured) was “kicking off meetings” ​to all suppliers to Northern and 2 Sisters (some 4,500) yesterday, and was keen to work with firms who volunteered the best prices and “value engineering”.

The process would begin with high-level briefings with key suppliers, he said, where Northern/2 Sisters management would set out how it was “being strong”​ for customers and consumers, by implementing the “most efficient supply chain to deliver high quality at lowest cost”.

Best price now

Topics covered in the meeting include discussion of supplier opportunities within the new combined group and, "Do suppliers want to have a larger part of the existing business and share growth?"

Northern/2 Sisters is emphasising its search for suppliers who provide the “best price now and support us with loyalty overriders”​; it is also gunning for “better deals than exist today”​ , with suppliers handed ‘partner status’ and “opportunities to grow their business”​ in return, as part of meeting Boparan’s turnover goal. Northern/2 Sisters currently has a circa. £2bn turnover.

Asked to clarify what a 'loyalty overrider' was, the spokesman said it involved the supplier giving "a better deal today to take advantage of growth opportunities tomorrow, i.e. loyalty".

As easy as A,B,C…

Asked about the benefits a firm could gain by reducing its supply base, Alain Vix, marketing manager at supply chain expert Hughenden Consulting, told “It’s not just about cost; many firms concentrate on cutting cost by default. When you have a wide supply base you can’t put into place gravitative planning with all your suppliers.”

He said this related to gaining and sharing information in regard to forecasts, stocks, capacity issues, all of which affected supply chain responsiveness, in addition to the cost element.

Vix added: “Many companies adopt an ‘ABC’ approach to procurement: ‘A’ meaning suppliers they use a lot and ‘C’ meaning those they don’t really care about. If they lose the latter they can focus on the ‘A’ list suppliers, or those who provide better service standards.”

Knowledge is power

Working with fewer firms would enable a large group such as Northern/2 Sisters to better ask, ‘what do they need from us?’ ​in terms of information and forecasts, Vix said. “‘Also, what can we do to help, if we know their stock levels, for instance?’”

So what else did Vix think might be happening behind the scenes now at the new Northern Foods/2 Sisters group? “In the foreground there will be talk of rationalising the supply base, cutting costs, dealing with transport issues, considering moving production sites, etc..”

“But one key issue is cultural integration, which must be going on in the background, and which ultimately affects issues such as the supply chain.”

Different firms, said Vix, had different approaches to target-setting regarding suppliers and in their sales to customers, with one example being ‘key performance indicators’.

He explained that, whereas one firm might use ‘inventory measures’ – how much stock do we have in value terms, how much does it cost us? – another might look instead at stock turn. For instance, a yearly figure of 12 means a product is moved every month, 365, every day.

Vix added that use of different terminology or performance measures would have to be standardised across the Northern/2 Sisters group, to ensure the combined management team understood each other, before issues such as supplier consolidation could be addressed.

Related topics Bakery Chilled foods Frozen

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