Boots Group PLC (Nottingham, U.K.) announced a major investment in its chemist chain as it reinvests a significant portion of its retained proceeds from the $3.3 billion sale of its healthcare division. The investment will include the automation of its supply chain in the form of an automated $122-million warehouse.
"Our proposed supply chain investment is based on proven technology delivering greater productivity and lower operating costs. This will allow us to compete even more effectively while delivering a better service to our stores," said Boots chief executive, Richard Baker.
In a news release, Boots reports that over the past two years it has re-engineered its retail supply chain, freeing up people in stores by transferring sorting and picking work back up the supply chain to regional and central warehouses. These initiatives have delivered savings in store labor and inventory. Continuing this focus, the centralized automated order-picking warehouse in Nottingham will replace 17 regional warehouses with a similar number of simpler docking facilities.
The reconfigured supply chain will further reduce stock holding, improve productivity and lower property costs. When completed the reconfiguration will result in an estimated 2,250 job losses. The project is expected to take three years to complete and with a three-year payback period.