High street retailer River Island has built a future-proofed European distribution centre complex to ensure it can accommodate planned activity for the next five years, after enlisting the help of Bisham Consulting.
River Island has more than 60 years’ experience in fashion retailing and has recently moved into a new European distribution centre at Magna Park in Milton Keynes.
The 490,000 sq ft facility is made up of two separate units interlinked by twin bridges, which is designed to give this retailer the capacity and resilience it needs.
The company’s continued growth was leading to space constraints at its two existing distribution centres located in nearby Tongwell, as well as a separate e-commerce fulfilment site.
In 2007 the retailer decided to look at its next ten years of forecasts.
Arif Ahmed, logistics director of River Island, said: “At that stage we needed somebody to evaluate from a scientific point of view, what we believed we needed to meet these forecasts.”
River Island awarded Bisham Consulting the contract to help develop a strategy to address several key issues.
The most prominent issue was that the retailer’s primary distribution centre was built to initially serve around 110 stores, but it was actually having to deal with some 300 stores.
River Island was continuing to grow further still as it moved into Europe via franchises and own stores.
Risk management around business continuity was another vital issue for River Island, which delivers to all of its stores from the distribution centre, including those in Europe.
One of the first things Bisham Consulting did was to carry out a review of its existing distribution centres, which indicated that process improvement benefits alone would not be large enough to accommodate River Island’s growth projections.
A new future-proofed European distribution centre was then designed to replace these facilities, plus give the retailer room for expansion together with complete flexibility to help mitigate risk in its business.
Bisham Consulting identified the levels of future proofing required based on River Island’s requirements that would accommodate future peaks, which in retail can account for up to 40 per cent of business for a whole year.
Various options were examined with the possibility of relocating some or all of the new distribution centre capacity.
The company was keen to retain its existing staff so made the decision to co-locate the two new buildings on a single plot in the Milton Keynes area.
The new facility comprises two, self-contained units linked by twin bridges: The 270,000 sq ft DC1 holds River Island’s boxed product while the hanging garments are housed in the 230,000 sq ft DC2. The building includes a three-tier mezzanine, totalling 150,000 sq ft.
The scheme almost doubles the space River Island had previously but the retailer also wanted to improve lean operations. However, Bisham Consulting advised the company not to fundamentally change processes at the same time as relocating the operation to minimise the risk on migration and thereby ensure business continuity.
The new facility uses operations familiar to River Island but with throughput improvements from mechanisation where beneficial, such as providing a more “goods to man” operation in DC1 with the introduction of a conveyor carousel to reduce staff travel and linking the hanging garment conveying system through from goods receiving in DC2 – to consolidation with boxed product and dispatch.
SKUs are picked from locations in the racking onto order picking trolleys and then placed into barcoded totes that travel on a conveyor loop to the appropriate area in dispatch determined according to the routing system in River Island’s Warehouse Management Software (WMS).
E-commerce orders are picked in the distribution centre just as if the order was for a normal store. They are scanned at an induction station onto a sort conveyor before heading down chutes to be packed separately.
It was realised that the amount of space that could be gained by building a mezzanine structure above the ground floors was significant.
The mezzanine in DC1 is located over the marshalling area for buffering store orders brought in on the hanging garment rail from DC2 before dispatch.
River Island has created sufficient space to extend the mezzanine space out and to an extra floor above, with stubs ready for sprinklers, lighting and other fixings to attach on to if needed.
“Our previous distribution centres had no flexibility for expanding the mezzanine area,” says Ahmed. Here, we have built in resilience, in the event we require expansion in one unit several years ahead of expectation, we will not have to disrupt a live operation in full swing and affect service levels.”
DC2 is dedicated to the storage of the hanging garments, which are sorted and stored on a hanging garment rail system on a three level mezzanine over the goods in area.
The manual overhead rail system enables River Island to store and move hanging garments, which removes the double handling that occurred in the previous facility as there is no need for staff to take anything off or carry anything around. Bisham Consulting looked at the option of automating this system, costed it and even planned it into the design, giving River Island the option of a straightforward switch when the business case comes to justify it.
In DC2, unlike DC1, the warehouse beyond the mezzanine is empty of racking. Here, River Island’s investment in space allows for expansion of the multi-tier hanging garment storage and contingency space for River Island in the event of a catastrophe halting operations in DC1.
“It’s all about how quickly I can continue my business,” says Ahmed. “I can erect that building again in six months during which time I can easily maintain business from here. We take continuity of business seriously and this is reflected in the investment of both money and time.”
And just as DC2 can take an emergency boxed operation, DC1 can hold, if needed, about two thirds of the full capacity of DC2.
River Island works constantly towards leaner supply chain operations and the new distribution centres has “decoupling” points allowing River Island to operate from just one unit if, in the years to come, the supply chain is simplified to a point where the retailer decides it no longer requires the other. Separate power supplies, utilities, security desks, etc installed in each self-contained unit, gives River Island the flexibility to sell or lease either one in the future if required.
River Island moved in during January 2011, and closed down its smaller existing distribution centres in March and the larger one at the end of May, along with its e-commerce fulfilment site.
“We were looking for somebody to say: ‘we can see what you want to achieve here and we can get you there more efficiently or more effectively than before’” says Ahmed.
He concludes: “Our DC can adapt whether we grow or decide to contract as our supply chain model changes. Furthermore, while most retailers can bounce back after a disaster, not all can continue their business in the long term without a negative effect on their brand. We do not risk managing uncertainty; moreover we are certain to manage risk.”