Sunday 11th Dec 2016 - Logistics Manager

Improving productivity

Argos’ new 60,000sq m operation at Barton-under-Needwood is highly automated and includes a Centre for Direct Imports, enabling the company to control product availability and reduce costs. It is also the central distribution centre (CDC) for small products delivered to stores and homes nationwide.

Steve Melton, supply chain director for Argos, comments: “Argos carried out a fundamental review of its supply chain and concluded that unless substantial change was made it would become a constraint to the future growth of the business.”

Faced with significant growth of 40% in three years, the GUS board approved an investment of £140M to transform the Argos supply chain – the aim was to save £50M a year.

But according to Metlton, Argos had “never embarked on a supply chain project of this scale and complexity”. He continues: “The company looked for outside expertise and turned to top supply chain consultancy The Logistics Business to provide the combination of strategic logistics insight and practical implementation.”

The consultancy was also instrumental in developing the detailed business case for the project, which was put forward for main board approval.

The distribution centre also hand to cope with a business increasing product lines from 8,700 to almost 16,000, and take into account multi-channel operations with 20% of sales delivered directly to home while reducing costs to retain a competitive edge.

“Effectively the catalogue is an all season promise of a product availability to the customer,” says Melton. “It means that we’ve got to be in stock from the beginning to the end of the season and that’s quite unlike other grocery and non-food retailers. And that’s why assurance of supply as well as out pick accuracy is so important.”

The early work included validation of centralised distribution and introduced the concept of totes into the Argos supply chain for the first time. Next came the specification for a new CDC for small items – replenishing regional distribution centres (RDCs) and providing cross-dock deliveries for stores in the UK and Republic of Ireland. The solution also provides substantial savings in operational costs, freeing up resources at the busy RDCs.

The consultancy also confirmed the suitability of basing this in the same building as the Centre for Direct Imports – essentially a bulk storage and container to palletisation “factory”.

The project included use of the TLB’s i-Flow model to analyse throughput and storage requirements. A high degree of automation was recommended in order to achieve the necessary efficiency throughput. Vanderlande Industries was chosen as the provider for the handling and storage system at the heart of the new site.

The final design incorporates complex integration of technology, including automated high bay storage, miniload, automated palletising and support for advanced tote picking, with associated warehouse management and control systems.

Products arriving in containers are manually loaded onto boom conveyors, linked via sortation to automated palletisers. Loads are then transported to the fully automated bulk store, which also replenishes the sophisticated small products picking operation

Goods from the bulk store are moved to workstations, where small products are loaded into totes and moved automatically to a miniload system. This holds stock ready for rapid supply to the advanced picking solution where orders are assembled under the control of a pick by light system.

Completed totes are assembled and fed to automatic stackers where they are made into 2m high wheeled loads ready for easy handling through despatch and store delivery. The overall operation can handle about 250,000 order lines daily.

A new semi-automated returns system in the same building identifies and sorts product for re-packaging or return to suppliers. Melton explains: “Reverse flow is a commonly neglected area of the retail supply chain. There’s lots of non-added value handling and it also consumes valuable capacity.”

Melton says that the Barton site is providing a focal point for the growing flow of direct imports into the business, and it has helped remove much of the manually intensive handling. It is also enabling Argos to deliver substantially improved productivity and enhanced pick accuracy. n