Supply chain making progress, says The Co-operative

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The Co-operative Group says it has made “great progress” in its food supply chain following the takeover of Somerfield last year.

In its first half results it said the supply chain was “currently in the midst of a consolidation that will greatly benefit the business long term, and the planning for roll-out of our SMART programme, which will see store replenishment and range controlled and managed centrally, thereby allowing store managers to concentrate greater efforts on customer service and on colleague engagement.”

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Since taking over Somerfield the Co-op has refurbished the 582,000 sq ft St Helens that warehouse was originally opened by Somerfield eight years ago to serve the North West and Wales.

At Birtley, near Sunderland, it opened a 285,000 sq ft hub in April 2009 which incorporates ambient, chilled and frozen storage. From there goods are distributed to 260 Co-operative stores throughout the North East and Scottish borders.

And in February of this year, it got planning permission for a 467,000 sq ft regional distribution centre at Andover Airfield in Hampshire. The site is being developed by Goodman.

Trevor Ashworth, director of Co-operative food retail logistics, said at the time: “The Andover site, which will employ 900 people when fully operational, is ideally placed to serve our food stores in the south of England, and will enable us to continue to provide Co-operative customers with the high standards of service they expect.”

In Scotland it is building a 500,000 sq ft national distribution centre at ProLogis Park M8 Newhouse.

In its interim results, the group said that like-for-like sales in the pre-Somerfield acquisition stores were up by 4.1 per cent. “However, as expected, this result was adversely affected by a fall in sales in Somerfield stores, caused by the unavoidable disruption that comes with large-scale integration. As a result, like-for-like sales for the total estate, including the results of the Somerfield stores post-acquisition, were down 1 per cent.”

Supply chain developments also had a big impact on The Co-op’s pharmacy business which produced 26 per cent rise in operating profit to £18m.

It has opened a £16m automated distribution centre at Meir Park in Stoke on Trent, which is supplying fast-moving prescription medicines and OTC products, with each branch receiving a delivery daily.

“We have made progress this year by improving our efficiencies and controlling distribution costs through the national distribution centre,” the group said.

Overall, the group reported a 14 per cent rise in underlying operating profit to £307m for the first half on sales up eight per cent to £6.9bn.


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