Morrisons cuts logistics costs

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Morrisons last year cut its distribution costs by two per cent, measured on a cost per case basis, as a result of investment in improved systems such as voice picking in its warehouses and from a network rebalance following the opening of its new South East regional distribution centre at Sittingbourne.

It has now submitted a planning application for a new RDC in the South West, at Bridgwater, which will provide further capacity when needed in 2011/12 to support further expansion.

Announcing its results for 2009, the retailer said its Optimisation Plans first launched in 2006 had delivered annual EBITDA improvements of £526m.

The Optimisation Plan, which concluded in January 2010, included significant investment in infrastructure including the new Sittingbourne RDC.

The 900,000 square foot site will service 65 stores in the South East, will ease capacity issues created by growth in recent years and will reduce the distance travelled in servicing these stores by around 13.75 million miles a year.

The group said that the roll-out of voice picking technology across all its grocery warehouses has been completed increasing depot productivity and pick accuracy, and hence improving in-store availability.

The Optimisation Plan included the first phase (£110m) of a programme of systems renewal, which will continue for a number of years.

Morrisons is replacing all its core systems, including store based point of sale, warehousing, manufacturing, supply chain, product management, HR, payroll and financial systems.

The primary technology is provided by Oracle, the store based systems by Retailix and systems integration is being undertaken by Wipro.

Over the coming year it will begin to roll out the warehouse management systems as well as the new EPOS system to all stores. “Additionally, we will begin to populate the new product master file which will, in due course, replace our legacy system.”

Group sales were up six per cent last year to £15.4bn while underlying profit was up 21 per cent to £767m.



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