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Tesco slashes expenditure with supply chain analysis


Posted on 17/04/2013 by Wayne Brophy FCILT

Tesco has praised the effectiveness of a new project which has saved millions of pounds and a raft of supply chain jobs.

The supermarket teamed up with retail analytics provider Dunnhumby to launch a scheme that would delve into customer data. Over the past five years, the company has also been applying the same technique to assess the way in which its supply chain is operated and look at elements which it can be improved in a cost-effective manner. Tesco identified measures could cut waste, optimise promotions and note when to match stock to react to fluctuations in demand.

In an interview with Information Age, Duncan Apthorp, supply chain system development programme manager at the supermarket giant, explained that the move came came about when a Tesco Direct executive moved over to the supply chain department. He managed to persuade a company director to grant him some budget to run a small sales forecasting project after spotting a gap in market. It was granted, and in just one year the scheme managed to save Tesco £16 million.

Mr Apthorp told the news providers that the "project built the engagement with the business" and it has now ramped up the importance of analysing data within a supply chain and assess when markets are liable to change and react accordingly.

One of the success stories is Tesco's ability to adjust stock levels based on weather forecasts and is done by comparing historic weather data against sales record in stores across the UK. It ensures that it does not run out of sought-after seasonal items.

Tesco has had a turbulent time of late in regards to the running of its supply chain. The system came under increased scrutiny in the light of the horsemeat scandal when equine DNA was found in the supermarket's products that had been labelled as beef. The store was not alone in the issue however with the likes of Ikea and Findus also being found to be selling products that contained the tainted meat.

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