The meteoric growth of omni-channel is driving major changes in retail logistics operations. Rosy Hill reports from the recent Logistics Manager Summit on how companies are responding.
Click and collect is the new trend in omni-channel environments, according to industry professionals who took to the stage at the first of two 2013 Logistics Manager Summits, at Sandown Park, in Esher, on 26 June.
Chaired by the Freight Transport Association’s head of logistics, Karen Packham, the one-day conference aimed to inform logistics and distribution managers on the latest developments in technology, warehousing, fulfilment, and reverse logistics.
John Munnelly, senior project manager for distribution at John Lewis, focused on using automated solutions to support growth and efficiency in an omni-channel environment.
Having entitled his presentation “A Time for Change”, Munnelly explained he wanted to emphasise the “crazy world we live in and the changes our industry has gone through in the last five or six years.”
He said the retail industry in particular has developed, with consumers having moved on from the traditional way of shopping, in shops and department stores, to the world of multichannel, where they will eventually move onto the world of omni-channel.
Using the company’s 650,000 sq ft semi-automated national distribution centre at Magna Park, Milton Keynes, which opened in 2009 and handles around six million units a week, as a case study, Munnelly explained how John Lewis has kept up with online change in recent years.
He explained how solutions there are broken down into two key components; branch replenishment and direct to customer.
“From the branch replenishment point of view, the key at Magna Park, in terms of its ability to stream products, is very distinctive. We break down the products to just over one thousand picking group combinations. It’s all about little and often, with replenishment.”
John Lewis’s click and collect service supports its direct to customer solution, and now handles around 30 per cent of the company’s online offer.
It uses a range of technology, from a mixture of manual picking in the form of floor racks and static racks, and automated picking.
“The automated picking, which we’ve introduced in the last three or four years, has been a necessity. Having to access these thousands of products any other way would have been very challenging, so there’s been the need for automation.”
Crew Clothing’s logistics manager Richard Brodrick also emphasised the importance of click and collect, during his session on overcoming cost pressures in an omni-channel environment.
“Crew is only a £55 million business, it’s relatively small in terms of its overall life cycle and only 20 years old as a brand,” he said.
“But we have a huge appetite for growth and a huge appetite for the variety of our products to be available to purchase through every channel.”
The company provides a multi-channel offer but its retail arm is its biggest and most successful, with £27 million worth of revenue a year.
Launched only in April 2012, the forecast for the company’s click and collect service was to receive around 250 orders within the first week – in fact it received around 1,000.
“There was no big advertising, we simply put a click and collect option on the web site’s checkout, which customers could just find as they went through their web journey.
“The service, for Crew, isn’t just about customers buying their items and away they go – we actually have to interact with them throughout the whole process and make sure they know when their order leaves the warehouse, when their order’s actually in store, the whole journey.”
Crew is currently trialling click and reserve, which sees its store teams given one hour to find a specific product and reserve it.
Paul Hughes, logistics manager at Southco Manufacturing, Europe, focused on continuous improvement, saying that continuous improvement is simple, but companies only realise this when they look into something, after recognising that it is there and has to be dealt with.
“A continuous improvement team is a big project win, we don’t want to bite off more than we can chew so we have to be very selective in what we do.
“You need a mix of cross functional members on one of these teams, so you’ll have someone from finance, someone from production engineering, even HR – they will ask questions that nobody else will ask.”
He also touched on the demand for security within companies: “They are demanding not just quality now, but security too.”
On the topic of teams, Harrods’ Simon Finch, deputy director, distribution, said that the key to any project is the people, who enable success, during his afternoon session on how to deliver major relocation and structural change on budget.
The company had been based in a distribution centre in Osterley, since 1988, which was the largest of its kind in Europe at the time. In March 2010, after selling the Osterley facility, Harrods embarked on a project to find a new site, and review how the business had changed throughout the years.
45 miles away, in Thames Valley a site was purchased in June 2011. Finch said the company’s strategy on such a significant move was to spend time with its employees, to ensure they moved with the company. Through frequent communication with its teams, travel contributions, redundancy funds, and loyalty schemes, were introduced.
“Taking people with you is the most important factor, he said. “They are key.”