Page 5: Improving efficiency
The Company set itself the target of reducing operating costs by £60 million in a full year by reshaping the organisation and achieving efficiency improvements. Within its distribution network, the strategy has been aimed at improving the quality of service while reducing the cost base. The distribution network is now centred on six major sites, supported by a similar number of smaller ones. The new structure has produced important benefits for the business, including annual savings of 3.9 million kilometres in vehicle journeys and a 5% reduction in the number of vehicles in the fleet.
The supply base is also being consolidated as suppliers fall increasingly into two categories: volume producers with relatively large shares of Safeway’s business, who are both low cost and innovative in product development and specialists who provide the range, quality and innovation needed for regional and local markets. Within this framework, the aim is to achieve the closest possible match between demand and supply. This has to be done by accurate sales forecasting, effective communication with suppliers, using electronic data interchange to transmit orders, moving products through the depots as fast as possible and reducing waste in the stores.
In the food retailing sector, most attempts by any one of the major players to gain a competitive advantage over the others can be quickly copied or bettered. It is much more difficult, however, to minimise genuine differences in the way in which people behave, both towards customers and each other. The “Make a Difference!” programme introduced by Safeway in 1995 is aimed at seizing this advantage.
This programme means changing the way people work together and moving towards a style of leadership which is both more involving and supportive and yet demands high standards of performance. It also means an increased investment in training and development to ensure that all staff know what the business is trying to achieve and are clear about their role within it.