The European Supply Chain Excellence Awards 2007: Winner: Homebase

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Innovation, in the context of the Supply Chain Excellence Awards, isn’t the same thing as invention. Naturally, if an entry does offer something radically new, whether in terms of processes or technology, that would be a good recommendation for this award, but we are looking rather wider; for example to find entrants who have innovated by introducing methods or processes that may be commonplace in other sectors, but are unusual or unknown in their own business area – cross-fertilisation of ideas is one of the aims of the Awards scheme, and indeed of ‘Supply Chain Management’.

On that basis, the judges created a shortlist of three for the Innovation Award: Optos, World Design & Trade, and Homebase.

Optos is a young, Scottish company (founded in 2000 and gaining a Stock Exchange listing last year) with an impressive growth record in the production and supply of retinal eye examination machinery. The innovative aspect here was the business model – Optos doesn’t sell these sophisticated machines outright – it essentially puts them into the marketplace (opthalmic surgeries and the like) on a ‘pay per use’ basis. The supply chain implications of course lie in asset maintenance and managing the product life cycle. The assessors found this business model fascinating, but felt it was a little too early to be sure that the model works. Nonetheless, a reminder that there is more to supply chains than shipping goods and forgetting about them.

The entry from World Design & Trade, in the fashion industry, was both innovative and inventive in the sense that, having canvassed the market and having failed to find packaged software that they felt was appropriate to the way they wanted to run their business, they went out and wrote their own, pulling in skills and needs from every function, and thus arriving at a solution which suits them and has total ‘buy-in’ from every part of the business, and in the process moved from a ‘spreadsheet and Word’ basis to a supply chain organisation which can capture and disseminate all the relevant data, internally and to third parties. Interestingly, one ‘innovation’ has been to place IT under the supply chain director, rather than as a report to the CEO.

But the judges’ preferred candidate for the Innovation Award was Homebase. The entry from the UK DIY and homewares chain focused on the improvements over the past 18 months or so in the supply chain from Far Eastern suppliers, especially in highly seasonal lines such as barbeques or garden furniture. By their own admission, this used to be very much of a ‘push’ operation, which meant that ‘product availability in store was either feast or famine’.

The result had been a serious drop in profitability over three years or so – clearly, the supply chain had to do something, but at the same time there was little or no investment capital available. The solution has been a series of innovative changes in practice, some quite small but taken together, transforming the business.

The innovative thinking has been truly global – from creating greater understanding of demand patterns, to negotiating directly with Chinese producers to create optimal solutions ‘out there’. Richard Morgan, Homebase’s supply chain director, particularly notes the way in which Christmas decorations, artificial trees and so on are picked by store in China, for delivery direct to UK stores in easy-access cardboard pallets, labelled by bay, and incidentally making it much easier for stores to set up Christmas displays. He is also proud of the ‘Golden Pallet’ delivery system to stores, whereby the first pallet off the vehicle contains only those products for which that particular store currently has no stock. The assessors also liked the deal struck with Boots on sharing warehouse space for seasonal products. In short, no one breakthrough – rather a whole raft of ideas that have gone a little outside the conventional box, and where financial constraints on investment have been seen, not as a barrier but as a motivation.

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