Tesco ties seven suppliers to Extranet to track sales
by 29 Jan 1998

Supermarket chain Tesco has unveiled an Extranet that enables seven of its suppliers to track the sales of products on promotion in the retailer's UK stores. CCSB, Nestle, Britvic, St Merryn Meats, St Ivel, Kingcup Mushrooms and Proctor & Gamble are the first suppliers to participate, and Tesco says its expects the service to be extended to the majority of its suppliers across all 588 UK stores.

The Tesco Information Exchange (TIE), jointly developed by GE Information Services, provides the seven with access to up-to-the-minute sales data of products on promotion. The aim is to maximise the availability to customers of popular products while reducing the wastage of over-stocking, part of Tesco's Efficient Consumer Response initiative.

In a typical supermarket between five and 10 per cent of products can be on promotion at any one time. Estimating consumer demand without hourly sales tracking data can result in products selling out at peak periods, thus resulting in loss of revenue, or wastage due to over-supply. "Ensuring our customers always get the products they came into Tesco for is key to our business," said Tesco divisional director, Joe Galloway. "Waste reduction is also very important. We can tell whether a promotion will be a success or failure from the first day, often after the first hour's sales."

The Extranet will be used at all stages of a product promotion, starting from the initial proposal, through business planning and supply chain management, execution and final evaluation. Early trials with St Ivel have proved that suppliers have already experienced significant benefits in their day to day business. Introducing a new product will be quicker and more efficient as specifications for new lines will be made available electronically to the supplier.

St Ivel national account manager Dan Rusga estimated that the system could realistically save Tesco and St Ivel 30 per cent of joint annual promotional costs. "The system has already shown its worth, enabling us to estimate the levels of stock to fulfil promotions," said Galloway. "We are now engaged in trials with other suppliers."

TIE is part of a rolling programme by the giant grocery retailer to use web-based technology for sharing information with its suppliers. In May last year Tesco - again with GEIS - linked its electronic data interchange (EDI) ordering and invoicing system to a Web-based Extranet, enabling small suppliers outside of the EDI system to communicate with Tesco on the same footing as its largest suppliers.