30 March 2006
Boots plans to save £60 million a year in supply chain costs before 2011 by centralising distribution, restructuring major IT contracts and axing 2,250 warehouse jobs.
Boots has 17 regional warehouses, which are to become lorry-docking facilities. It plans to replace the warehouses with a £70 million automated facility in Nottingham within the next three years.
It predicts a saving of £50 million by holding less stock at warehouses by 2011.
In the past two years Boots has made a number of changes to its supply chain. In 2005 the company announced savings of £80 million after switching to a demand-based system (see News, 3 November 2005
The company also plans to alter its major IT contracts, including a £70 million-a-year outsourcing deal with IBM, to meet its new needs. It expects these to carry some implementation costs but hopes to see a return on investment within three to four years.