Boots is revamping its supply chain with a £70m automated warehouse built in Nottingham to supply the retail operation. It reckons that the changes to the supply chain and IT will remove around £60m of structural annual operating costs by 2010-11 and there will be a reduction of around £50m in stock holding. The cash cost of the changes (which also include some store investment) will be around £250m with an additional £45m of asset write-offs.
Chief executive Richard Baker said: “Our proposed supply chain investment is based on proven technology delivering greater productivity and lower operating costs. This will allow us to compete even more effectively while delivering a better service to our stores.”
The reconfigured supply chain will reduce stock holding, improve productivity and lower property costs. When completed the reconfiguration will result in around 2,250 job losses.
The project is expected to take three years to complete and payback is expected within three years of completion.
The company has started consultation with its employees. In the past two years it has re-engineered its retail supply chain, freeing up people in stores by transferring sorting and picking work back up the supply chain to our regional and central warehouses. This proposal will see the creation of a centralised automated order-picking warehouse in Nottingham and the replacement of 17 existing regional warehouses with a similar number of simpler lorry docking facilities.
