Oxfam will replace its purchasing and supply-chain systems in a bid to reduce its stock handling costs and increase the sales of new products in its shops.

The charity has made a capital investment of £700,000 over five years in a supply chain, buying and merchandising suite from K3 Retail as well as warehouse management and store portal solutions from the company. The new system is expected to be in place, across its 690 high street shops, by the summer of 2013.

The investment represents 1.4 per cent of Oxfam's anticipated new product sales in that five year period. But it is set to save the charity ongoing costs. Andrew Horton, director of trading at Oxfam, explains: “The main cost saving is to do with reduction in stock holding cost – typically we put seasonal new product stock into shops at the start of the season, and with the new system we will buy smaller quantities and more often, hence reducing the finance commitment on a seasonal basis.”

He added: “The main benefit is anticipated to be that our ability to drive sales increases as we will have the new product as we will have the new products in the right shop location, in the right quantities, at the right time and at the right price.”

Horton also said that he expected that some warehouse costs would be reduced through quicker picking and packing.

There will be no direct job losses, but Horton expects “a reduction in seasonal workers in the warehouse over time”. The buying and merchandising team will spend less time on manual processes and more time analysing the data, he advised.

After several years at the top of the top of Charity Finance’s annual Charity Shops Survey table, Oxfam came second last year with an income of £87,896,364 and a profit of £26,905,954. According to the latest set of accounts filed with the Charity Commission, Oxfam derives 23 per cent of its income from trading.

The 2012 Charity Shops Survey will be published with the October edition of Charity Finance.