Mothercare loses millions with failed IT system

Retailer Mothercare learnt the value of robust IT systems this week when it watched £23m get wiped off its market value following accusations that its inventory system is failing.

The retailer blamed the system from British inventory specialist Tibbett and Britten for the problems. Stock was stuck in a warehouse at Daventry instead of being transported to Mothercare's 250 UK shops.

Mothercare was forced to admit the system wasn't up to scratch and could endanger Christmas stock levels. The stock market reacted brutally, slashing over seven per cent from Mothercare's share price. Today saw a further fall of 6.5 per cent.

A statement from Tibbett and Britten said: "Lower than planned productivity levels in the warehouse resulted in a very rapid build-up of stock and consequential site congestion. This has led to the recent difficulties, while additional resources were brought into play."

Steven Buckley, marketing director at supply chain specialist Exe technologies, said: "It looks like they haven't sized the system properly, and failed to train staff properly. You shouldn't need physical evidence of stock backing up - the system should tell you immediately."

Buckley said Mothercare would have to get suppliers to deliver stock directly to stores to avoid the warehouse. This incurs higher costs - the cost of the warehouse, the cost of inventory stuck in the chain and the social and environmental costs of having many deliveries to each store.

But a spokeswoman for Mothercare insisted the system itself is working but product backlog is still causing some problems. She said: "Tibbett and Britten have assured us it will be weeks not months for a fully functioning system."