The Co-operative Group has started trialing a logistics system aimed at integrating its supply chain and reducing operating costs.

The convenience store chain is working with supplier Manhattan Associates to develop and test the effect of an integrated supply chain on its existing business operations.

The pilot will initially be run at one warehouse with a view to expanding to a further 14 more warehouses during the first six months of next year.

The Co-op hopes the system will improve its supply chain by working with its existing business applications. If the trials are successful the system could be fully integrated by early 2006.

The retailer says the software may also lead to increased productivity, reduced operational costs, fewer supply chain errors and a faster warehouse stock turnover.

And the Co-op says its customers will benefit from better inventory knowledge and an increased choice of store supplies.

'Initially we are only testing the new system at one warehouse, but if it's successful it will be rolled out for further testing and possible replacement of our current procedures after that,' said Trevor Ashworth, general manager of retail logistics at the Co-op Group.

'A successfully integrated logistical supply chain will help us to maintain our future business strategies.'

Over the past few years the Co-op group has expanded considerably to 1,756 stores nationwide, and it says changes to the existing supply chain will allow further business growth.

The principal reasons for the Co-op's decision to re-engineer its supply chain were a need to improve on-shelf availability and to enhance the effectiveness of its operations.

'We needed an infrastructure that would create a much more efficient inbound, as well as more flexible and store-friendly outbound supply chain operation,' said Ashworth.

'The advanced functionality of the distribution and transportation software, and its ability to help us exploit real-time information on a whole variety of logistics activities in our own organisation, as well as exchange this kind of data with our suppliers, will give us more control over just about everything we do.'