Morrison drives benefits with regional transport operation
Supermarket chain Morrison claims to have already achieved significant business and environmental benefits since starting to bring together two very different logistics systems into a single operation, following the acquisition of Safeway in March 2004.
Early results show that kilometres per driver have improved 6% against the target figure, while cases handled per kilometre are 10% above the target, according to David Hennessy, business applications director at Morrison. And a reduction of 100 pallets required each day at one site has resulted in 20 fewer road trips.
Major cultural change was required to achieve the successful amalgamation of the two supply chain operations and significant lessons have been learned, said Hennessy. "No matter how good your operations are, you will definitely flush out issues you were not expecting."
The project, which has so far been rolled out to around four sites, is the most complex IT project the retailer has embarked upon since the acquisition, said Hennessy. He said: "The benefit case was quite amazing ... I am confident we have got the business to buy into this."
Speaking at a supply chain conference organised by the CIES food business forum last month in Prague, Hennessy said as a vertically integrated operation Morrison does everything for itself - from manufacturing to retail. The company now has about 9M customers, served from 378 stores. It has a turnover of just under £13bn and employs 130,000 people.
The project was set various criteria for success, including delivering the business case; reducing the carbon footprint of the transport operation; meeting the transport warehouse operational requirements; and aligning the project with the company's IT strategy to move away from using mainframe computers. However, the desire to reuse assets where possible presented some challenges, Hennessy admitted.
Ann Murray, managing consultant with IBM, which worked closely with Morrison on the project, said the aim was to create a single business model, bringing together both manual and automated transport operations. "We spent a huge amount of time pinning down what the business requirements were," said Murray. "That was not easy for us," agreed Hennessy.
On real-time tracking of truck movements, Murray said: "We spent a lot of time on this part of the change in Morrison to manage the performance of the drivers."
Prior to the takeover, Morrison's approach had been based on a very simple - though cost effective - model involving full load deliveries and fixed routes "very much driven by the warehouse and manufacturing operations", said Murray.
However, that all changed and the levels of complexity rocketed, following Safeway's acquisition. Safeway's logistics were operated centrally by a third-party and were very store focused, said Murray. They were "probably the most sophisticated approach to transport planning in the UK", she added.
"Morrison is not known for advanced technology," said Hennessy, who admitted it was "an enormous journey for us"
"There was an opportunity to put a total transport plan in place - to improve efficiency and reduce costs," said Murray. While a fully centralised approach was probably a step too far, the move to regionalised planning offered significant benefits, she said. "They could get that buy-in regionally."
