The UK retailing industry is admired the world over for its forward thinking and technology has helped put it ahead of the game.
UK wholesaling, however, despite its impressive financial performance, continually plays catch-up when it comes to implementing the latest pieces of new kit or software and this, according to the industry’s biggest technology providers, is costing it efficiency and most probably profit.
Ivan Durkin, md of STL Technology Solutions doesn’t mince his words: “I’ve worked in this industry since 1978 and wholesaling has always been at least four or five years behind retailing. Even the more progressive wholesalers are only just starting to look at technology that retailers have been using for several years now.
“The current climate has left little margin for error in the wholesale trade as managers in warehouses and distribution centres remain under extreme financial pressure”
He uses the checkout process as the perfect example of where a technology already taken for granted by many supermarket and DIY customers could be useful to wholesalers. “I was standing in a Birmingham depot just last week and every single checkout was busy with queues of between 30 and 40 minutes.
“They were all retailers re-stocking, but what about restaurant owners who just want to grab a small number of items they ran out of the night before? If they could use self-scanning they wouldn’t have to be caught in those long queues,” he says.
In anticipation of the wholesale industry finally taking self-scanning seriously STL has recently joined forces with equipment provider NCR and Durkin says he’s certain that wholesalers will eventually follow the supermarkets. “It’s just a matter of when.”
He adds already one is now considering trialling self-scanning but he admits that many are put off by the initial capital outlay. “The cost of each unit is between £5000 and £6000 but one operator can manage eight self-serve checkouts so there is a significant return on investment.”
Another area wholesalers have been slow to pick up on is web-based ordering. Supermarket shoppers have had the convenience of choosing their groceries from the comfort of their homes for years and now wholesalers are beginning to see that busy retailers and foodservice customers would
also appreciate the service.
Just last month Bestway launched a new, fully transactional website and May also saw a “virtual” wholesalers, launch online for the licensed drinks trade. (See stories below)
This online business not only provides another level of customer service, but also wipes out cost for the wholesaler as orders are placed directly into the fulfilment process, which eliminates re-keying, reduced paperwork and minimises errors.
Martin Beatty, product director at Sanderson agrees that wholesalers could be better at embracing technology, but says the ones that are ahead of the curve in their industry are seeing massive benefits.
“For instance voice technology is replacing handheld in depots,” he says. “Picking stock was traditionally someone with a handheld scanner literally moving around the depot with a printed piece of paper, which was a disruptive process. With voice technology they are given instructions a little like sat nav and can pick and confirm at the same time.” He adds that as well as being quicker and more accurate, it’s safer for depot workers.
He adds since voice technology was first introduced around 10 years ago the technology has improved significantly and the cost of installing it has fallen meaning there’s now a big shift away from handheld.
“People had it on their shopping list to purchase four or five years ago and were curious about it…now there’s a very short pay-back period of between 12 to 14 months.”
Richard Adams, EMEA vp for Vocollect, says a short return on investment period is now crucial for businesses investing in kit. “The current climate has left little margin for error in the wholesale trade as managers in warehouses and distribution centres remain under extreme financial pressure. This in turn has contributed to growing demand for quicker returns from IT investments, particularly voice-directed picking systems, which offer fast and quantifiable return on investment.”
And Adams adds that voice technology is not only being used for picking. “Many European companies have spotted the potential for voice across multiple applications. One is Glanbia in Ireland, which has installed it picking, transfers, receiving, loading, stock-counting and forklift applications.” (See our case study on page 47).
A French maker and distributor of decorative paints, uses voice for a different mix of processes, such as picking, film wrapping and loading control. Says Adams: “As a result, these companies are seeing a significant uplift in performance and cost savings – benefits that UK companies should be embracing.”
Tim Williams, divisional director of distribution for BCP says the current global financial crisis is forcing wholesalers to embrace technology in a bid to protect ever slimmer margins.
Forecasting and replenishment software allows a single buyer to manage thousands of SKUs and help them achieve that delicate balance between stock levels and customer service. The systems, he says, are programmed with data resulting from different past scenarios – from the weather to major sporting or national events – such as last year’s Royal wedding.
“Forecasting can’t replace what the buyer does every day but it can take the nuts and bolts out of it to maintain a 98%-99% service level… a lot of the people that use our system use it all the time.”
“VIRTUAL” BID FOR DRINK SALES
The licensed hospitality sector saw the launch of a ‘virtual’ wholesaler last month when Ooberstock went live with promises to deliver “greater transparency, lower prices and improved customer choice” over traditional operations.
Ooberstock is an online wholesaler where drinks suppliers can upload their product details, including promotional offers, new launches, photographs and prices. The retail customers pay net prices direct from the suppliers, which include a transaction fee for each order they place, plus a £24 delivery charge. Ooberstock charges a fee for each litre of product that is ordered from the brand owner, meaning suppliers’ costs are directly tied to the volume they sell through the website. Outlets can choose their own weekday delivery slots.
Suppliers which have already signed up to Ooberstock include: Heineken UK; Coca-Cola Enterprises; Britvic Soft Drinks; Budweiser Budvar; Red Bull; SHS Sales amp; Marketing; Highland Spring and Wells amp; Youngs;
The company also says more than 4,000 pubs, bars, clubs and hotels have registered for its web-based service and it is targeting a further 70,000 over the coming weeks.
Arran Heal (pictured), managing director of Ooberstock, says: “By the end of the summer retailers will be able to buy from the ranges of four out of the top five spirits companies and we plan to bring on other niche suppliers including speciality spirits, wines, world beers, ciders, premium soft drinks and additional cask ales.”
Heal adds another USP of the site is that it allows suppliers to target promotions to specific outlet type or postcode areas and measure the return.
The technology and logistics support behind Ooberstock is provided by logistics company Kuehne and Nagel, BCW Group – a business process outsourcer and Itradenetwork, which provides supply chain IT management services.
Ooberstock says social media and a mobile phone app are now in the pipeline.
Vocollect says it takes no more than 25 minutes for a worker to “train” a voice-directed system to understand their particular voice or accent. They simply speak all the relevant key words and the voice recogniser then stores an individual profile for that worker. Even if they have a cold, the voice recogniser will still understand them and if the warehouse has a lot of background noise the system will adapt over time to become increasingly accurate.
BESTWAY MAKES ONLINE PUSH
www.bestway.co.uk has been under development with a select group of customers and is now part of a wider six-month redevelopment of Bestway’s online offer. Aimed at independent retailers, caterers, foodservice and the export market, the site allows web orders to be sent to the customer’s local branch so that they may be picked ready for delivery or collection.
Dawood Pervez, Bestway board director said: “The considerable investment behind the new web initiative has ensured that we are now at the leading edge of online wholesaling in this country and are best placed to continue to add customer friendly services as we continue to develop them in the future.”
The site allows Bestway’s customers to view a range of 17,000 SKUs and check out the latest promotions, deals and weekly offers. Multi-buy deals are also available.