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

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 FoodManufacture.co.uk: “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.