Tesco is to test continuous replenishment of fresh foods in up to 10 stores over the Christmas period, according to a leading analyst. Schroder Salomon Smith Barney's David McCarthy says in a briefing note: "Assuming the system works, and that any bugs are ironed out, the process will be rolled out to all stores for fresh food by the end of 2001." He added: "Currently over 100 stores are on continuous replenishment for ambient groceries and frozen food ­ the two product groups easiest to develop because of their long code life. "More stores are being added and the plan is for all stores to be on continuous replenishment for grocery and frozen in the run up to Christmas." Tesco is two thirds of the way into a six year project to introduce continuous replenishment, which allows orders to be picked and delivered throughout the day, so reducing lead times from 24 to eight hours. Continuous replenishment carries many risks, particularly for fresh foods. But McCarthy says its successful implementation will provide significant productivity benefits and a "major, sustainable, competitive advantage". He believes Sainsbury could be up to eight years behind Tesco in the field. The analyst says the other benefit of continuous replenishment is that by tackling out of stocks it will continue to make instore picking a viable feature of Tesco's online home shopping strategy. {{NEWS }}

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