Woolworths: Supply Chain Management

For Woolworths, its food supply chain is essential to fulfilling its commitment to reach high performance, and so maintain its dominance of the high-end food retailing market. It turned to Accenture to help it develop a highly integrated solution to support this strategy.

Woolworths—one of the largest textiles and food retailers in South Africa—operates more than 120 company-owned stores and employs some 8,500 people. In addition there are more than 34 franchise stores in South Africa, sub-Saharan Africa and the Middle East. All stores sell a select range of Woolworths-branded clothing, homeware and food products. Turnover for 2000 was about R5.92 billion.

Woolworths needed to improve certain aspects of its food supply chain to enable it to increase efficiency, reduce waste and deliver a better service to customers.

Three key problems that the solution had to address were:

• Low in-store product availability.
• High levels of product waste.
• High volume of discrepancies between the store stock ledgers and the central financial stock ledgers, making stock management difficult from both the merchandising and financial management perspectives.

Combining its in-depth understanding of the industry and experience in using technology to support a business's drive to achieve high performance, Accenture helped Woolworths to develop a highly integrated Food Supply Chain Programme.

This programme, which comprised a number of core functional projects, as well as cross-programme supporting projects, was developed to re-engineer the supply chain to improve stock availability and decrease waste. A centralised stock ledger providing a single merchandise and financial view of stock was also introduced.

The key problems addressed, in part, by changing from a weekly allocation process based on pushing stock to stores to a daily process ensuring the right quantities of stock are pulled into the stores based on forecasted sales and the current stock position.

This was not simply an exercise to correct specific problems, but was aimed at across-the-board improvements which would help Woolworths improve its overall business performance. As a result, the programme impacted all areas of the business, including buying groups, interactions with suppliers, distribution and stores. This complex web of interdependencies—both from a systems and human perspective—contributed to the complexity of the programme.

Woolworths now has a world-class food supply chain—and is well on its way to realising manifold business benefits.

On completion of the rollout across the country food sales increased by more than 20 percent, attributable in part to the Food Supply Chain Programme.

In the Western and Eastern Cape stores, where Accenture was involved in the first rollouts:

• Eighty three percent end-of-day availability was attained, leading to increased sales.
• Waste was reduced significantly from the baseline.
• Stock loss was brought down to well below the target figure.

The value-based arrangement Accenture struck with Woolworths helped form a true partnership where both risk and reward were shared.

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