Greggs' supply chain transformation strategy rolls on

High street baker Greggs’ said it made “significant progress” with its process and systems investment programme in 2017, while the year ahead will be a “peak year” in terms of investment in its supply chain revamp.

Those were key technology-related updates from the business as it revealed interim results for the 12 months to 30 December on Tuesday, which showed total sales were up 7.4% year on year to £960 million and company-managed like-for-likes grew by 3.7%.

Operating profit excluding property profit and exceptional items jumped 4.6% to £81.7 million, but pre-tax profit of £71.9 million was down £3.2 million on 2016.

Last year represented the fourth year of Greggs’ major transformation programme, which involves new systems integration that is moving the business away from a traditional bakery-based operation to a national food on the go retailer.

The company selected SAP’s HANA which will be used as the core ERP function for its new business model, as it looks to standardise operations and drive efficiencies across its network. Systems integrator Keytree played a key part in the process, as did in-house SAP programme manager James Holmes, who departed the business in January after four years driving the project.

Included in the transformation has been a complete finance systems implementation, as well as new procurement capabilities, the introduction of cloud-based HR application SuccessFactors, and in 2017, the fitting of SAP’s forecast and replenishment solution.

At the same time, Greggs has been increasing its logistics capacity and centralising its manufacturing operations into what it describes as “centres of excellence” – with plans to open a factory dedicated to doughnuts in the north-east England later this year.

This model “will deliver improvements to product quality, our competitiveness and, alongside systems investment, will complete our transformation from traditional bakery to food-on-the-go”, CEO Roger Whiteside said on Tuesday.

“Overall our expansion plans will create thousands of new roles in retail and distribution operations but will result in fewer jobs in manufacturing,” he added.

“Decisions such as these, which impact our people, are always difficult but our teams have shown commitment and professionalism throughout these changes and we have been able to agree a way forward on a basis of voluntary redundancy in the majority of cases.”

Whiteside said this phase of investment will take until 2020 to complete, but he suggested the new systems are already starting to benefit the business in terms of better product availability. Savings in the form of lower wastage figures are expected as staff get used to the new systems, he added.

“In the second half of the year we successfully deployed pilots in both logistics and manufacturing which will be rolled out alongside our supply chain investment programme.

“Scoping work has also begun for the remaining SAP support modules, with human resources, payroll and property management to be implemented in 2018.”