Supermarket group Somerfield has made significant savings through a process of rationalising and improving the management of temporary staff.
Regular seasonal and promotional store activities mean that it is important for distribution depots to have a consistent supply of good quality temporary staff to support the peaks in volumes.
Somerfield supplies its 1,000 stores from twelve distribution centres split into five operating regions using third party logistics companies Exel and Wincanton. It was spending more than £12m on temporary drivers, warehouse and administrative staff. There were significant admin and back office costs as a result of the volume of invoices and timesheets processed. More than 200 agencies were supplying temporary staff across the country, with a myriad of charge rates and overtime calculations.
It brought in consultants de Poel to help it review and consolidate existing suppliers, enhance service delivery through the introduction of service agreements and the establishment of regular meetings between customer and supplier. De Poel began work with Somerfield in May 2005 conducting a review of agency usage and spend, pay and charge rates and service levels across all depots. Recommendations included standardised regional pay and charge rates and the rationalisation of suppliers. Once these recommendations had been discussed and approved, existing Somerfield agencies were invited to attend a series of presentations outlining the proposed changes and were asked to confirm their intention to continue supplying staff.
From the responses received de Poel proposes a list of suitable suppliers, from which a select agency panel was agreed and set up. “e-tips”, de Poel’s web-based electronic timesheet and invoice processing system was then implemented throughout all client and supplier locations.
Somerfield was able to make weekly cost savings of six per cent. The number of suppliers was cut from more than 200 to 65 while the establishment of formal service agreements and regular meetings with panel agencies to ensure pre-agreed key performance indicators are being accomplished. In addition, the consolidation of agency invoices into a single, electronic invoice is reducing administrative costs and freeing up staff time. Following implementation of e-tips, Somerfield is investigating the use of two other de Poel systems, “add”, an agency driver database, and “sub-e”, an electronic subcontractor management and invoice processing system.
De Poel says standard implementation time for a project of this size is normally 13 weeks, however in this case it managed to put the system into operation across the depots in just eight weeks and as a result, cost savings were delivered five weeks earlier than planned.