Sainsbury's eases stock problems

27 April 2005
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28 April 2005 | Liam O'Brien

Sainsbury's has slashed the number of out-of-stock products for stores by 75 per cent since September, according to supply chain director Lawrence Christensen.

The development follows the company's failed implementation of high-tech supply chain systems last year, resulting in large numbers of so-called "stock-outs" on its stores' shelves.

Christensen, who heads direct and indirect procurement, told SM: "We have had a lot of success with what we have been doing. At least now the supply chain is working consistently, compared with before when significant quantities did not get through to the stores.

"That does not happen nearly so much now. We have reduced out-of-stocks by 75 per cent."

Last October, Sainsbury's wrote off £120 million of supply chain IT investment and introduced additional manual support where systems were failing.

He expects many of the supply problems to be corrected by July with further improvements in the run-up to Christmas.

Christensen was previously supply chain director at Safeways. When he was hired in September by Justin King, Sainsbury's chief executive, he was given a year to turn around supply performance.

The stock improvements have been welcomed by City analysts who forecast putting the supply chain on a better footing will boost profits for Sainsbury's and its prospects.

David Stoddart, retail analyst at Tether and Greenwood, said the stock-outs "were horrible".

"You only had to go to its stores to appreciate that, so getting the supply chain right will give it potential for recovery. It will make the existing business inherently more profitable.

"A smoothly running distribution system will open up growth in areas such as non-food."

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