Sainsbury's banks on insourcing

Supermarket chain Sainsbury's expects bottom-line benefits within two years from cost savings arising from the decision to drop its outsourcing contract with Accenture.

Supermarket chain Sainsbury's expects bottom-line benefits within two years from cost savings arising from the decision to drop its outsourcing contract with Accenture.

"The IT cost savings will start to come through in 2006/2007, with the full benefit of the change impacting the second half of next year," the company said as it announced flat profits for the six months to 8 October.

Sainsbury's revealed its decision to bring its IT operations back in house on 27 October, and is working with Accenture on plans to bring about 500 staff back to the retailer by April 2006.

It would not put a figure on the costs of cancelling the contract, but said it would take a charge on its balance sheet this year.

Sainsbury's said it would spend £43m on its IT and supply chain in the first half of the 2005/2006 financial year, out of a total capital expenditure of £216m. This compares with £79m IT investment and £553m overall investment in the same period for 2004/2005.

* Sainsbury's has increased the number of suppliers using its Kewill online order management system by 1,200 to 3,300. The ability to process and manage orders electronically has helped reduce the number of items out of stock.

 

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