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Speeding up the Supply Chain
In retailing today, time is all important. If the time it takes to get from selling the goods to reordering them to the delivery of new supplies can be cut, then stocks can be reduced, stockouts avoided and both profits and customers benefit.
Information technology plays a vital role in improving this efficiency by providing accurate details of customer demand, speeding the ordering process and optimising delivery networks to ensure that the goods arrive in the stores as quickly as possible.
In the UK, major supermarkets like Tesco and Sainsbury have invested heavily in supply chain systems in recent years to improve performance. The investment has paid off: in April, Sainsbury reported a 13 per cent increase in pretax profits to 518 million [pounds] on sales of 8.2 billion [pounds] while Tesco attributed much of its 28 per cent increase in profits, to 417 million [pounds] on sales of 6.35 billion [pounds] for the year to February 1991, to continued investment in high-tech systems.
The ability to respond quickly to customer demand is crucial for retailers such as these and both companies are heavy users of electronic data interchange (EDI) whereby they can communicate directly with suppliers' computers for placing orders.
Those suppliers are not all major multinationals: they include a Welsh goat farmer who receives orders from Tesco's Chepstow depot via his PC each day, ready to deliver the necessary quantities of goat's milk, yogurt or cheese within hours.
Typical of specialist IT moves designed to improve …