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Savings to supply chain helps increase WHSmith profits

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Posted on 15/10/2013 by Wayne Brophy FCILT

Thanks to a number of supply chain initiatives, including the use of new voice picking technology, and other cost-reduction schemes, WH Smith says its high street business saved £18 million last year.

The company said that reducing costs was a main element of its business strategy, and it was continuously looking for ways to save money in all areas.

It’s a tactic that seems to be working, as the high street division’s operating profit was up four per cent – reaching £56 million for the year to August 31st – even though the company has experienced a seven per cent drop in sales.

Commenting on the results, a spokesperson for the company said that this was good progress, and explained that, as well as the addition of voice picking in the distribution centres, other ways in which costs were reduced included rolling out energy-efficient tills to all high street stores, remodelling transhipment routes and other operational efficiencies.

“We also have a number of initiatives on trial such as: improving trailer configuration in our distribution centres; centralising energy management for stores; more self checkouts; and changing our web site hosting,” the spokesperson added, explaining this should add up to an additional $10 million in savings and bringing the overall target to £22 million over the next three years.

The firm’s focus on cutting costs and generating profit from stores, even when sales fall is a strategy that was first put into place by chief executive Kate Swann, who ran the business for ten years. Her replacement, Stephen Clarke has pledged to continue this tactic.

“Looking to the year ahead, we continue to plan cautiously in an uncertain environment, however we are a resilient business and are well positioned for continued growth in both the UK and internationally,” he said.

Meanwhile, independent retail analyst Nick Bubb indicated that finding ways to cut costs – such as in the supply chain and other behind-the-scenes processes – was a good way to keep a company afloat without changing the customer experience. This is certainly something that supply chain managers should consider when looking for ways to improve business efficiencies.

“The message is that there is no need to change something that is still delivering the goods,” he said.

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