Food retailer Iceland has signed a five-year contract worth £500 million with DHL Supply Chain to manage the UK warehousing and distribution of all goods, extending its existing relationship.
DHL has worked for Iceland over the past four years and will now serve a further 70 stores as the company’s expansion continues throughout the next year.
The new stores will be served by Iceland’s existing network of distribution centres and DHL will be responsible for ensuring that the sites are able to manage the increased volume while maintaining service levels.
As the majority of new stores will be based in the south of England, DHL will also manage the re-allocation of existing stores to alternative distribution centres within the network.
DHL has reportedly saved Iceland more than £4 million in operating costs and is set to save a further £3 million over the next year.
These saving have been achieved through improvements in warehouse productivity, planning, geographical store delivery rationalisation and fuel efficiency initiatives.
John Mackie, supply chain director at Iceland, said: “DHL have proved over the last three years that they are capable of responding to the needs of the Iceland business. They have driven cost savings whilst significantly improving service to our stores.
“As a customer our demands are extremely high; the DHL team have responded to these challenges and delivered excellent results. Awarding this five-year extended deal shows the confidence we have in the DHL team.”
Chris Sharp, managing director, food retail for DHL Supply Chain, added: “We were originally appointed by Iceland in 2005 to manage just two of its four distribution centres. Within a year those centres had become the highest performing in terms of costs and service levels. As a result we were invited to take on management of the remaining two.”