Woolworths slashes costs with supply chain tech

High street retailer Woolworths has streamlined its distribution with supply chain management (SCM) software from long established partner SAP.

Speaking at SAP's Sapphire conference in Berlin, Neale Almond, business systems manager at Woolworths, said the tech has contributed to a seven-figure cost saving through reduced transport and fuel costs and improved planning and productivity.

Until recently the processes for order picking and stock distribution remained less than cutting edge, with many processes being fairly manual and labour intensive.

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The company therefore decided to move onto SAP SCM software and started implementation at its Bedford and Swindon distribution centres at the beginning of the year.

Woolworths was SAP's first UK customer back in 1989 and has used SAP for Retail enterprise resource planning software since 2000.

On choosing SAP over other systems, Almond said: "There is no simple answer to this and I think it boils down very much to what your business needs."

The retailer had some tough requirements with 820 UK stores of different sizes and delivery frequencies meaning the distribution and supply chain is very complex.

In addition, the different lead times for more than 30,000 individual products were also an issue. For example, sweets take a few weeks to be delivered while clothes need to be ordered 12 months in advance.

And the fact Woolworths is a multi-channel retailer means store and customer deliveries need to dealt with within the same system.

Almond, said: "Replenishment has to be really, really flexible. Control is absolutely key."

The SCM system has increased visibility of the supply chain. Almond said: "It makes managing your inventory much simpler and easier. Knowing which box is in which cage in which lorry is pretty damned important."

The tech has also ended the need to print individual pick labels for each item that goes through the distribution network, meaning around a billion pick labels per year have been saved.

In the near future, Woolworths plans to roll out the SCM tech in its soon to be opened distribution centre near Manchester and carry out an upgrade to SCM 5.1 in September.