Selfridges will profit from e-procurement

Selfridges has unveiled ambitious plans to roll out an Internet-based electronic procurement system. The system promises to transform the business by delegating buying and stocking decisions to suppliers.

The department store hopes to create huge savings and steal the lead on its competitors by scrapping its traditional EDI links, in favour of an Internet-based network. The network will allow it to share sales data and delegate decision-making to 2,500 suppliers by the end of next year.

Selfridges claims to be the first store in the UK to create efficiencies by using the Internet to hand over responsibility for buying decisions to its suppliers, following similar moves by retailers in the US.

Alun George, Selfridges' head of IT, said, "We are working towards brand management with the major suppliers. That means putting responsibility for choosing the ranges they deliver within the brand to the suppliers. It's a totally radical change."

The store plans to pilot the Retail.com service with a few major suppliers by the middle of the year, increasing to 50 suppliers by the end of the year, with a full roll-out in 2001.

Selfridges claims that the Retail.com service, provided by US retail specialist Retek, is cheap enough for even the smallest suppliers to use - unlike EDI. Users require only a PC and a Web browser to access the system.

Selfridges will be able to make significant savings by handing over re-stocking decisions to the suppliers, who often have a better idea of which lines are selling well than in-store buyers, said George.

The system will also automate purchase orders, delivery of invoices, payment advice and delivery notes, thus eliminating re-keying errors which lead to hours of wasted staff time.

"We create about 400,000 new products every month. Inevitably we get a huge number of errors, with people mis-keying information," says George. "We have 16 people just keying data in. There are significant savings to be made."

The move was made possible by a £7m investment by Selfridges in Retek's enterprise resource planning system 18 months ago, which is providing managers at the store with detailed statistics on the performance of each of its product lines.

Selfridges has outsourced its datacentre to Cap Gemini, in a £5m, five-year deal, following its demerger from the Sears group in 1997.