Tesco has introduced a new payment system to enhance its supplier relationships, emphasising trust and efficiency over traditional auditing processes.
Tesco, a leading name in retail, is advancing its payment procedures by extending its Good Faith Receiving (GFR) auditing system. This system, based on trust, aims to expedite payments and diminish disputes related to stock deliveries. It operates under the assumption that most supplier deliveries are accurate, thereby facilitating prompt payments. Any discrepancies in delivery volumes or stock conditions are resolved subsequently, typically on a quarterly basis.
The decision to expand the GFR system follows its successful trial with Tesco’s chilled suppliers, where improvements in delivery accuracy and on-shelf availability were noted. To ensure the process is fair and transparent, an independent third party will conduct sample checks on deliveries. Tesco has also constituted a dedicated GFR team tasked with supporting suppliers during this transition. This team provides webinars and site visits to ease the adoption of the new system.
Tesco’s move aligns it with other major retailers like Sainsbury’s, Morrisons, Asda, Co-op, and Waitrose, who have adopted similar GFR frameworks in response to the Groceries Code Adjudicator’s (GCA) pressures. The GCA recently highlighted the persistent issue of late payments within the sector, with 14% of surveyed suppliers reporting delays in the past year.
Participation in Tesco’s GFR system remains voluntary for suppliers, offering them the flexibility to opt-in based on their preferences and needs.
By adopting the Good Faith Receiving system, Tesco not only aims to refine its payment process but also seeks to foster a more cooperative relationship with its suppliers.
