The end of the chain: is this the future for distribution centres?

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It’s a bit of a departure from the norm, today. E-commerce and last-mile logistics is, generally speaking, something The Loadstar hasn’t covered. But for retailers, it’s becoming an increasingly important part of the supply chain; the customer-facing, sales-oriented side of the business. And it has increasingly important consequences for suppliers along the chain – especially in technology.

And so, in the interests of education, The Loadstar found itself delving in to the end of the supply chain, entering the vast halls of a retailer’s distribution centre.

Marks & Spencer, for those who don’t know it, is a rather iconic British retailer. It does have an international presence, and is expanding abroad, but for the most part it relies on the UK high street. It is where the English buy their socks – and more lately, sandwiches, too. (M&S does, of course, sell other things. But if you were able to check, you would almost certainly find at least one M&S product in every single underwear drawer in the country. And a nationwide, guilty pleasure in its expensive-but-worth-it, ready-made meals.)

The company’s fortunes, like other retailers, have waxed and waned over the years, but a Britain without M&S is unthinkable. After all, it is 128 years old.

Yet despite its grand old age, under its current management it is not afraid to think differently.

Like other retailers, it is seeing huge growth in the demand for e-commerce. And that required a new way of distributing its wares. Previously supplying its 700-plus stores with some 110 warehouses around the country, it is boldly planning to cut that number to just four. “They will be EDC NDCs,” said Darrell Stein, director of IT and Logistics. In other words, a joint e-commerce and national distribution centre.

The first site to be completed, which will become operational in April, is in Castle Donington – pretty much bang in the middle of England – and has access to the major north-south motorway, the M1. M&S has also built a rail terminal next to it for connections to Felixstowe. And – despite the company’s protests that it tries not to use air freight – it is on the doorstep of East Midlands Airport, the UK’s second busiest cargo airport.

“It will combine both e-commerce and store distribution – and is unique,” added Mr Stein. “It’s the biggest dedicated EDC in the country, and possibly in Europe.” In peak times, he expects it to ship 1 million products a day.

And it is vast. It’s hard to describe – or even see  – the scale of it. With a footprint of 900,000 sq ft, and more than 25 metres high, it could accommodate 12 747s – and boasts Europe’s largest solar wall. But it is also, at points, split into five floors, giving it even more capacity.

The space is divided into three cavernous chambers – one for boxed goods, one for hanging garments and one which combines the two for shipment to homes or shops. It is fully mechanised, with complex streams of conveyor belts, and highly sophisticated IT systems – 200 people worked for two years on the IT.

But for all this to function, explained Stephen Ottoway, programme manager, partners right along the supply chain must be involved. “Our suppliers in Asia have to tell us electronically what goods they are sending. Everything has to be labelled and read correctly.  So we have had to make all our suppliers compliant  – in 1,500 locations. They are all being trained.”

The total cost of the project has not been released, except to say “multi-million”. But the overall idea of combining both e-commerce and store distribution is to cut transport costs, while the proximity of other retailers’ e-commerce warehouses allows M&S to use existing delivery networks and, in effect, combine resources with rivals.

The centre is only for general merchandise, with perishable products not available on e-commerce channels. The future of the food distribution network is still under discussion.

Critically, explained Mr Ottoway, the site has a lot of capacity, and a lot of flexibility, so it would be able to cope with further growth in the retailer’s e-commerce arm. “So far it has grown far faster than we forecasted,” he said.

M&S is recruiting 1,000 staff for the automated centre – with a focus on getting the disabled and long-term unemployed back into work, in a partnership with specialist employment service Remploy. The idea came from the US company Walgreens. “We can always find reasons why we don’t want to do things,” said Tanith Dodge, M&S’s HR director. “But we wanted to help those who find it difficult to get employment. And we’ve found that those recruits are very loyal and dedicated employees, and there is low turnover.”

Another bold move from a company that sets much store by sustainability.

And back to freight news:
Agility reports that the Brazilian Customs officers strike has now passed the 90-day mark, and is “greatly” affecting Guarulhos and Viracopos airports, and Santos port. “The strike is delaying all cargo checked by customs on the yellow and red channel, import and export side. The strike stands to paralyze air and sea freight for several more weeks.”

However, port managers at Inchcape Shipping Services say that although there are delays, they are not drastic. “It’s flowing slow, but flowing.”