Argos revamp costs £100m

High street retailer Argos has completed the first phase of an ambitious global sourcing supply chain initiative, a £100m project...

High street retailer Argos has completed the first phase of an ambitious global sourcing supply chain initiative, a £100m project designed to cut costs and improve efficiency.

The company, which has 474 stores in the UK and Republic of Ireland, plans to revamp its entire supply chain and has split the project into four phases: product tracking; distribution; in-store product management and customer-facing product management.

Retailers show increasing interest in these types of systems. Tesco implemented a similar global sourcing system earlier this year.

Maria Thompson, commercial director at Argos, said the company had seen significant growth in its store, catalogue and e-commerce sales, and identified the need for a new IT infrastructure to support this growth.

"More effective sourcing of goods and improved stock management will enable further growth and ultimately lead to improvements in customer service," she said. "And as a multi-channel retailer, we need different supply chains for each different channel."

The new supply chain system will also allow Argos to tailor specific stock to individual stores in response to demand, Thompson explained. To complete the first phase, Argos has implemented a product-tracking application from software provider QRS, that is designed to enable the company to source, track and perform cost-modelling on all goods as products move along the supply chain.

The Tradeweave Sourcing application will allow Argos to build up the cost of products through every stage of the supply chain, taking into account the region, duty and exchange rates, said Thompson.

"By getting exact costs from every stage we will be able to identify areas where we can save money, by changing the port we use, for example," she said.

Argos is also planning a central distribution centre, due to open in 2003, that will store slower-moving items.

The company is confident that the global sourcing initiative will be successful. "We are investing £100m over a four-year period in this project to improve the supply chain from end to end," said Thompson.

Read more on IT outsourcing

Start the conversation

Send me notifications when other members comment.

Please create a username to comment.