SAINSBURY COLLABORATION SAVES CHAIN $5 MILLION

PATRICK SCIACCA

LONDON -- J. Sainsbury plc here has been presented with an award for effectively reducing its annual supply-chain costs and improving its collaboration with suppliers.

The retailer saved about $5 million in supply-chain costs last year through collaborative initiatives and the use of Internet technology, according to company officials.

The recognition for "Most Outstanding Use of Information Technology in the Supply Chain" was presented at the Retail & Consumer Global Food and Drink Awards 1999 sponsored by the Financial Times.

The retailer's savings are based on efficiencies arising from improved management of promotional activities, said David Hatch, project leader of collaborative systems at Sainsbury.

"These savings have been generated at an increasing rate since the launch in the spring of 1998 and their continuing rollout to more and more suppliers," he added.

The Web-based Collaborative Planning System, which was developed by the retailer with Eqos Systems, Leatherhead, Surrey, has also led to a 20% reduction in out-of-stocks, according to information obtained from the retailer's Web site.

CPS requires suppliers to have a PC, an Internet connection and an Internet browser, according to the retailer.

The CPS, which is geared toward implementing and managing promotions, and is kin to CollaborativePlanning, Forecasting and Replenishment initiative in the United States, is one piece of the larger Sainsbury Information Direct initiative.

SID was started in 1998 as part of Sainsbury's Efficient Consumer Response plan, an industrywide initiative to improve supply-chain efficiency. The SID components are free to suppliers, the retailer noted.

Sainsbury's SID plan also contains a daily product update on its Web site called the Performance Data Site, which enables trading partners to view sales and stock data.

"All major retailers can say they have a similar site, but Sainsbury's has some genuine innovative differences," Hatch said.

"The site has genuine collaborative capabilities. In other words, both members of the supplier/Sainsbury partnership can have input into the promotional planning process," he added.

The Sainsbury collaborative supply-chain system also supports a Web-based electronic data interchange service, which was developed with the help of a third-party and aimed at helping communication with the retailer's smaller suppliers.

Sainsbury's trading partners can receive orders and production-planning forecasts as well as send invoices to the retailer via the same route, according to Sainsbury.

Looking to the future, Sainsbury is piloting some other supply-chain initiatives such as promotional evaluation, which, according to the retailer, is a system-driven tool that allows post-promotional targets to be set and then automatically measures the success of promotions against preset criteria.

The system also allows problems to be highlighted to the users, Hatch said. This will help to improve future forecasts and plans, he added.