In a significant move towards enhancing supplier relations, Tesco is implementing a streamlined payment process designed to foster trust and efficiency.
The retail giant has expanded its Good Faith Receiving (GFR) system, which aims to facilitate a more efficient payment process and minimise disputes related to stock deliveries. The GFR system is based on the principle that the majority of supplier deliveries are accurate, thus allowing payments to be processed promptly without being hindered by discrepancies in delivery volume or stock conditions. Any issues are subsequently addressed, generally on a quarterly basis.
After a successful trial period with its chilled suppliers, where delivery accuracy and on-shelf availability showed remarkable improvement, Tesco is now extending the GFR system to a broader range of suppliers. To ensure fairness and transparency, an independent third party will check deliveries on a sample basis.
Furthermore, Tesco has established a dedicated GFR team tasked with supporting suppliers throughout this transition. This team is offering webinars and site visits to simplify the implementation process for the suppliers.
This initiative aligns Tesco with its competitors like Sainsbury’s, Morrisons, Asda, Co-op, and Waitrose, which have been employing similar systems for several years. The introduction of these systems was initially driven by pressure from the Groceries Code Adjudicator (GCA) to tackle issues regarding late payments and unwarranted deductions. Even the current GCA, Mark White, has recently emphasised the ongoing concerns surrounding late payments within the industry.
The 2024 GCA supplier survey highlighted these concerns, with 14% of respondents claiming to have experienced payment delays in the past year. Notably, Tesco’s new system remains voluntary for suppliers, thereby granting them the choice to participate.
Tesco’s adoption of the Good Faith Receiving system represents a proactive strategy to strengthen its supplier relationships and improve operational efficiency.
