Burberry SAP rollout near completion

Burberry has said it is nearing the end of a business-wide SAP rollout, aimed at slashing costs and improving stock tracking.

Ninety percent of its stores around the world now use the system, having added its Asian outlets to the system this month. Weeks before that, it also switched on SAP in its European distribution hub.

As a next step, Burberry said it will implement a new e-commerce platform “later in 2010”. Online sales still represent a “small” part of its business, it said, but grew 60 percent in the financial year to 31 March.

Improving systems has been a key strand of Burberry’s strategy to cut costs. In November, it said had saved £50 million during the year with the SAP-led programme. The implementation was aimed at improving the luxury clothes retailer’s supply chain and logistics, as well as its visibility of store sales and inventory.

The efficiency programme also includes upgrading other IT systems, the closure of six “underperforming” stores, the rationalisation of the company’s own clothes manufacturing, and 1,000 redundancies globally.

SAP had delivered “process improvements” in store planning and stock replenishment, it said in November, because the system was providing “better data” than the company had before. Burberry has said it expects SAP to provide a “long tail” of benefits over time, supporting the move to a smaller number of distribution centres, rationalisation of material suppliers and the move to distribution of goods by sea.

Supply chain software improvements have been particularly targeted at the Spanish market, whose poor performance has dragged on Burberry’s results in recent months.

As Burberry jumped from a £10 million loss last year to a £171 million operating profit for the 12 months to 31 March, chief executive Angela Ahrendts said the company plans to accelerate investment “in growth initiatives in retail, digital and new markets”.

Copyright © 2010 IDG Communications, Inc.

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