Food Lion 2010 Annual Report Download - page 26

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Regional Convergence
and Standardization
Where will these savings come from? How does one simplify a
three continent, six country operation and very different cultures?
By fully playing the scale and expertise of the Group, either through
local or regional initiatives as well as through increased visibility.
Like on price structure and on working capital. A common target
can only be achieved if you have a clear view on how to get there.
Delhaize America as an umbrella
One of the most important elements of the New Game Plan was
the creation of Delhaize America, the new umbrella organization
for our operations in the U.S. Within this new organizational
structure, a number of initiatives are ongoing to integrate the
former three separate back offices, procurement and supply chain
structures of Hannaford, Food Lion and Sweetbay. This is in line
with our Group’s philosophy to differentiate what is important to the
consumer and converge or standardize what is not important or
visible to the customer. At the beginning of 2010, Delhaize America
started to convert to a shared services platform for back office
The New Game Plan is built on the premise that cost savings generated from improving the
Group’s efficiency will drive the many sales building initiatives. Delhaize Group identified
EUR 300 million gross annual selling, general and administrative savings by the end of
2012. In 2010 the bar was raised and an extra EUR 200 million of gross annual savings
were identified in the area of cost of goods sold to arrive at a total of EUR 500 million, half
a billion, by the end of 2012.
Differentiate what is important to the
consumer and converge what is not.
functions. Operations such as accounting, financial analysis, legal
and business development have been centralized. In terms of
systems, the entire U.S organization moved to one finance platform
and started the harmonization of all human resources and payroll
systems.
In 2010, Delhaize America announced the creation of one common
procurement organization for all its operations. The new structure
will support all U.S. banners with assortment and promotions
planning and execution, sourcing, promotions and private brand
management. It will enable our U.S. organization to speak with
one voice to suppliers as one of the strongest players on the East
Coast. At the same time, our individual U.S. brands will be better
equipped to further develop their local commercial strategies. The
new procurement organization was completed at the start of 2011
and will start to contribute during 2011.
In 2008, our U.S. operations started their multi-year program to
create one single supply chain network. The network, based on
one single IT-platform will enable us to combine buying volumes
of our U.S operations and better manage inventory levels in the
entire chain. During 2010, Delhaize America successfully made
the transition to common warehouse, transportation and core
procurement systems supporting all of our banners and fully linking
and establishing common processes across our 12 U.S. distribution
centers.
European IT structure
Convergence of IT systems and structures is also on the agenda
in Europe. During 2010, a new vision was adopted for the IT
organization in Europe. The plan is to create one single platform
and organizational structure for Europe and Asia over the
next three years. The move to one single platform will facilitate
integration and render our IT operations less costly and complex.
The plan is also to optimize the number of applications in function
of local needs and structure the IT department around three centers
of excellence: ERP-supply chain systems, retail operations and
engineering. Realizing this will be a tremendous undertaking, but
the benefits will result in a competitive advantage. The ground work
for this evolution or even revolution was laid in 2010. In the end, the
Group will enjoy more comfort and the operations will run more
efficiently and thus less costly.