Tesco profits boosted by global sourcing initiatives

Tesco has said that a "sharp improvement" in its international operations have been achieved after moves toward global sourcing.

"Our International businesses are also increasingly leveraging the scale and skill of the Tesco Group, with more international sourcing, more integrated buying of goods-not-for-resale, Discount Brands in seven markets, F&F clothing now selling well in ten countries, Clubcard in nine countrieswith more than twenty million Clubcard holders outside the UK and the Tesco Operating Model sharing our global best practice to the benefit of all our businesses. These synergies are becoming substantial, particularly in Europe," the company said in its Interim Results statement for 2010/2011.

According to this statement Tesco globally has enjoyed a 8.3% increase in group sales to £32.9bn for the year. It also revealed 9.1% growth in group trading profit, including 30% growth in Asia.

The results statement also reveals that the company is working to build supplier relationships. In March, Tesco conducted the annual survey of its supply base through an online questionnaire across all markets. 3,887 suppliers (54%) of the invited global supply base took part in the survey.

"In recent months we have undertaken an extensive range of initiatives to support local suppliers across our markets," according to the retail giant.

"Our buying and technical teams met with approximately 350 suppliers, offering them advice on working with Tesco. We are building on these meetings by developing a Tesco Academy for Suppliers, which will take place in October."

Terry Leahy, Tesco chief executive, said: "The global economic headwinds of the last two years are being replaced by the tailwinds of recovery in most of our markets and this is helping our International businesses to resume strong sales and profit momentum. Our important Asian markets in particular are emerging strongly from recession and we are now benefiting from the substantial investment we continued to commit to the region during the downturn."

Source : Mark Hillary - Procurement Leaders