Retailers slow to automate supply chain

26 Feb 2004

The vision of a fully automated supply chain remains elusive for many Irish retailers, a new survey has found.

The poll of senior retail executives, commissioned by retail consultant Celerity and trade magazine ShelfLife, found that not only are Irish retailers behind their European counterparts in bringing new technology to the supply chain but much of the investment seems to be more tactical than strategic.

Low-lying fruit such as invoicing continues be the focus of many automation projects although 80pc of respondents identified the product/price list file processing as the area that contributes most to overheads.

The study also concluded that change management – relating to inter-company and intra-company processes, and the implementation of business process change – was the biggest barrier to supply chain automation.

Surprisingly IT costs rated only third in the list of such barriers.

Many respondents were agreed that supply chain automation is the best way of maintaining profitability in the face of rising labour costs and the strong performance of low-cost discounters such as Lidl and Aldi in the marketplace. Ireland has experienced the highest increase in labour costs in Europe recently and currently has the highest minimum wage.

Another finding was that, despite the imminent arrival of new ‘track and trace’ legislation across Europe on 1 January 2005 that requires all food and feed business operators to have systems in place that can follow product through all stages of the supply chain, the Irish retail grocery sector seems to be remarkably relaxed about the urgency to do anything, with over 40pc of respondents saying they knew nothing about their company’s readiness to comply with the legislation.

“There is evidence that further automation of the retail supply chain will be needed throughout 2004 to enhance the competitiveness of the Irish retail sector both in Europe and against the discounters. It has the potential to reduce overheads in the fact of increased labour costs, and deliver greater customer service to the consumer,” said Ken Halpin, managing director of Celerity.

“The survey highlights the need for ongoing investment in supply chain automation, which will facilitate more promotions and reduce stock-outs for retailers,” commented Declan Carolan, supply chain manager of Superquinn.

By Brian Skelly