Greencore focuses the spotlight on its suppliers

Greencore Group is tightening up on its purchasing function in an effort to combat rising raw material costs.

The company said it aimed to widen the number of items it purchased centrally and to ensure it was "dealing with the most successful suppliers". To that end it was increasing the size of its purchasing team.

"Rising raw material costs continue to be a major issue, which we need to manage with care and professionalism," said Greencore communications director Jonathan Grant-Nicholas. "While it is necessary to pass unavoidable costs on to our customers, we do need to make certain that we have taken every possible step to mitigate their effect before doing so.

"Greencore has been successful in maintaining its competitive position in the marketplace and intends to ensure this continues even more effectively in the future."

In his address to Greencore's AGM, chairman Ned Sullivan said: "For the current financial year, managing significant food inflation has become a key challenge for all players in the global food industry. To date, our convenience foods division has been successful in working with customers to offset this impact (estimated to total 8-10% of our cost of goods)."

He said the division had performed well in the first half of 2007. But profit had fallen 16% in the second half due to the impact of bad weather and raw material inflation in the final quarter.

Sullivan reported that Greencore had delivered 22% growth in operating profit in 2007, from £56.4M to £68.8M.