Morrisons CEO Dalton Philips has pledged to drag the company’s IT into the “21st century” as the firm invests £300 million in the overhaul of its IT systems.
Philips highlighted that a lack of sophisticated IT infrastructure has negatively impacted the business, the fourth largest supermarket chain in the UK, with problems beginning from the acquisition of supermarket chain Safeway.
“We’ve been running a 21st Century business on systems and infrastructure firmly stuck in the 20th Century,” he said in a speech in London on Thursday.
He said that “antiquated systems” have created a barrier to creating an online presence, with Morrisons recently announcing that it would finally be launching its online sales platform in 2014.
He said that although the firm was late to the online market, by signing a deal with Ocado - to leverage the logistics firm’s sought-after technology for its own delivery network - Morrisons has been ablet to make considerable cost savings in building an online presence, compared to its competitors.
"Our £30 million licence fee for the IT is less than a third of what it would have cost us if we did it ourselves – and we know it works and that it will keep improving," he said.
"It took our competitors years to build an online capacity of £500 million. We have done it in a stroke."
Philips said that the firm had also been taking steps to remove extensive manual processes that have had to be performed by the supermarket’s employees, with staff entering stock information onto paper forms.
“Even in 2013, our store managers have no real-time way of knowing what products are on their shelves, in the stockrooms or where replacements are in the distribution chain," he said.
"This lack of basic information has many knock-on effects.
“It means, for example, that we have to keep more products in our stores and distribution centres just in case they are needed, adding to our costs.”
Furthermore, until recently, cash takings were counted by hand each night, some feat for a company with £18 billion annual turnover, he added. Morrison announced in April that it was overhauling its cash office operations in order to automate cash handling.
However he pointed to investments being made by the company to overhaul its systems, with £300 million being spent on upgrading infrastructure, which he described as the “most advanced rebuilding of retail systems anywhere in the world”.
“When completed, our business and stores will go from having the worst systems to the best, leapfrogging a generation.”