A report by Scottish Food & Drink claims that more than 50% of Scottish suppliers “have little or no knowledge” of factory gate pricing (FGP). Where the suppliers are based is irrelevant as the same ignorance must be experienced elsewhere in the UK. However, what is relevant is that FGP is not new – grocery retailers have been actively collaborating with their suppliers and third-party logistics providers (3PLs) for at least the past 18 months. There is no excuse for suppliers not to know anything about FGP.
Having said that, how seriously is FGP being taken in making the supply chain more efficient? Retailers, especially the major supermarkets, are renowned for their influence over the ever evolving supply chain but have any of them terminated contracts because suppliers and 3PLs refuse to see their margins squeezed even further?
Today’s supply chain is all about collaboration, keeping real-time visibility throughout and making deliveries to end-users on a very tight just-in-time (JIT) basis. And it is the suppliers who should be controlling those deliveries; after all they are the ones dealing with both the end-user and the 3PL.
Wouldn’t it be better for one lorry to deliver a supplier’s products to several customers in the same high street rather than a half-empty vehicle serving one end-user and another delivering to the store next door?
The supply chain needs a multi-user distribution system that works, and the supplier can achieve that.
