Morrisons | Annual Report and Financial Statements 2010

Systems

During the period we accelerated the deployment of our new IT systems across all areas of the business. This six year, £310m programme of investment, will result in the replacement of all the Group's core systems and technology infrastructure. To date, the bulk of the Group's payroll, HR and financial systems have been replaced, a complete new wide-area network installed, the majority of store hardware renewed and voice-picking technology implemented in our grocery and frozen distribution centres. Additionally, the Group's new store electronic point of sale system has been rolled out to over 200 stores and the new trading product master file has been completed for the bulk of ambient and frozen products. The new ERP system has been successfully piloted in one produce factory, and has now commenced full roll-out. The software required to run our distribution centres is currently being piloted in one depot. The success of these activities, and our proven ability to implement changes with no impact on the business, give us great confidence for the remainder of the programme, which will run through 2013.

Network development

We continue to make good progress in the development of our new South West RDC at Bridgwater. This is an 800,000 square feet facility which will serve some 70 stores and provide further capacity to support our nationwide expansion. The total investment will be £95m. The site will open in the final quarter of 2011 and become fully operational in early 2012. This is three months later than we had originally planned, due to delays experienced by the site developer in achieving a viable total scheme for the site, which depends also on residential development that has proved challenging given the state of the housing market.

Food production

In order to deliver a unique, great value, fresh offer to our customers and really demonstrate that we understand the provenance of our food, our supply chain is key. We previously announced that we were reviewing further opportunities to expand our manufacturing operations and in the year we made two investments:

• we acquired Simply Fresh, a stir fry and prepared vegetable business for which Morrisons was the biggest customer, but which had significant further capacity. This will enable us to consolidate our sourcing of all these products in-house; and
• we acquired a cooked meat production plant which will add to our existing capacity and allow us to fulfil nearly all of our requirements in-house.

Both businesses are performing well.