Reduced shipment costs give economies of scale

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The Argos Retail Group (ARG), comprising Homebase and Argos, is using global logistics provider Kuehne & Nagel (K&N) to handle its supply chain management. The deal is claimed to be one of the largest ever concerning supply chain management.

ARG, owned by GUS, is one of the UK’s biggest non-food retailers and has plans to accelerate its direct import business with K&N’s assistance. This will lead to the shipment initially of around 65,000 TEUs to the UK over the next year, mainly from the Far East.

Since Homebase joined ARG in November 2002 the group has been aware of the advantages in combining resources. This contract will ensure that ARG has the ability to maximise supply chain opportunities across the organisation and will provide economies of scale through reduced shipment costs.

K&N offers the flexibility to manage separate processes for both retailers, while shared management information and operational capability allows ARG to identify and take advantage of group synergies. At the same time it will be able to maintain a clear overall view of its freight forwarding operations.

ARG and K&N have already enjoyed a successful partnership lasting over ten years, which began when Argos started to source products from Far East suppliers. Today, K&N employs a dedicated account team to manage the Argos business from point of origin to point of delivery, including vendor management, consolidation and pick and pack services, management of UK deliveries based on visibility and the prioritisation of stock levels and off dock storage options.

Through the recent contract signed with rail freight operator EWS, K&N is also providing an advanced rail solution to ARG to address the issues of road and port congestion in the UK.

Derek Young, head of purchasing for Homebase, comments: “Kuehne & Nagel’s end-to-end supply chain management capability, in terms of systems, service and operations is a perfect match for our current and future requirements, and its visibility solutions offer an extremely sophisticated management information tool.”

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