UK: Morrisons to overhaul supply chain systems

By Katy Askew | 10 November 2006

Having doubled the size of its operation following the 2004 Safeway takeover, Morrisons senior trading director Martyn Jones has acknowledged the need to adopt some of the former Safeway's processes and functions in order to meet the growing demands of a national chain.

"Morrisons and Safeway were too very different companies back in 2004, not least in the way they managed the supply chain," Jones told industry representatives at IGD's 2006 Supply Chain Summit, attended by just-food.

Morrisons was primarily a regional operation, Jones said, explaining that its processes were "people focused", while Safeway was a national chain with integrated, centralised, supply chain functions. "This was reliable and consistent, but at a cost. Morrisons approach is more responsive, flexible and agile," Jones suggested.

When Morrisons acquired Safeway, it faced a Competition Commission investigation and uncertainty weakened the brand, causing sales to decline. The company simply did not have time to integrate the two different systems, taking best practices from each, so instead Morrisons converted Safeway to its model.

Two years on, Morrisons is now ready to revisit this move, Jones said, enhancing its own systems with the best practices of Safeway. The company plans to remain people focused but use automated systems where they add value, retain Morrisons simplicity while increasing centralised control, retain the company's flexibility but increase automation, Jones said.

"We maintained our core principles of value and availability through a period of intensive change," Jones concluded. "In the future, we are investing in the best of both models."

Companies: Morrisons, Safeway, IGD