AS Watson grows sales while cutting stockpiles

Retail chain AS Watson has taken great strides in supply chain management over the past 15 years.

The company has more than 7,400 outlets in 36 markets around the world - including 223 ParknShop and 190 Watsons branches, and 52 Fortress, Taste, Great and Watsons Wine Cellar outlets in Hong Kong and Macau.

'ParknShop has less warehouse space now than in 1991, even though sales have increased by more than four times. The number of items available for customers has increased by more than 10 times in the same period, without any increase in stock,' said Keith Bartlett, AS Watson chief executive.

The improvement in other areas of the company's operations has been equally impressive.

'Fortress has decreased its stock levels by more than 50 per cent in the past three years, and Watsons the Chemist by 25 per cent in the past six months,' Mr Bartlett said. 'All of these results have been achieved without any loss of availability for customers. Out- of-stocks in Hong Kong are 2.5 to 3 per cent, which is better than the world standard of 5 per cent or higher.'

ASW had to overcome considerable challenges to achieve these results. 'In 1995, deliveries were being made to the company using 14 different pallet sizes, and it took a great deal of persuasion to move the trade to a common standard so pallets could be unloaded with fork lift trucks and exchanged, rather than manually unloaded at the warehouse dock. ParknShop also pioneered just-in-time delivery from suppliers, which [also] met with a lot of resistance,' Mr Bartlett said.