Supply chain automation and a commitment to the environment are designed into the fabric of John Lewis’s multichannel distribution centre in Milton Keynes, writes Joanne Ellul

Green technology and sophisticated systems are expensive, long-term investments but, when potential savings are to be had, retailers become interested.

And £250,000 in savings realised by John Lewis explain why eco-initiatives formed part of its decision to open a 650,000 sq ft distribution centre at Magna Park in Milton Keynes, working with developer Gazeley.

The semi-automated distribution centre went live in June last year and is the largest of seven John Lewis has. In tests in early August this year it achieved a record of 2.7 million items in and out for the week, up 63% on the previous week and 66% on last year.

John Lewis invited Retail Week to see how the distribution centre is helping to support the retailer’s increasingly multichannel business, while at the same time minimising its impact on the environment. Its flexibility to serve variable demand makes the centre ideal for John Lewis’s multichannel proposition. It delivers binnable products, such as lingerie and home items, both to branches and direct to customers. The retailer’s former Stevenage

distribution centre, which closed early this year to be replaced by Magna Park, was ill-suited to meet John Lewis’s multichannel offer.

“Magna Park allows us to build on the business, whereas the design of the Stevenage centre made it difficult to change to accommodate direct-to-customer growth,” Magna Park general manager John Munnelly says.

The Magna Park centre was always designed with expansion in mind. Even the car park can grow from 350 spaces to 500 to cope with seasonal uptake of staff at Christmas.

“The machinery is designed in a modular way to expand automation in line with growth,” Munnelly says. “This allows us to accommodate multichannel growth. We can select the technology based on growth and which channel it is in.” This is why both channels are served under one roof.

Further automation is likely.

A 150,000 sq ft storage area currently houses white and brown goods and hanging garments, which are then shipped to service buildings to be sent on to stores and customers. “Eventually we will move that area over to automation and, potentially, direct-to-customer,” Munnelly says.

At the moment 70% of products are sent to John Lewis’s department stores and 30% directly to consumers. Expanding the direct-to-customer service is on John Lewis’s agenda. Previously, only the gift services and call centre orders were sent to customers from Magna Park but, since September 1, online orders are also being fulfilled through the centre.

Automated retrieval

For John Lewis the £24m automated system is not just about efficiencies in that part of the supply chain but downstream, at stores, too. Picking is done manually, but 272 automatic shuttles, busy storing and retrieving products, contribute to sorting 900 bin group combinations on conveyor belts.

Stores can dictate the product groupings that make shelf replenishment easier. For example, the lingerie bin is next to the stationery bin on the belts, because those departments are in close proximity in a particular store. Automation means that products can be sent to the picker, rather than the picker going to the products, saving time. About 40% of the time spent in a traditional warehouse is spent walking, Munnelly says.

A 99.7% picking accuracy is achieved via pick-to-light technology, whereby lights indicate where the next item to be picked is and a display signals the number of items to be retrieved. The lights, flashing under the bin, tell the picker where to go next. Pick rates in a traditional manual environment can be as low as 100 items per hour per picker, whereas the installed automation enables John Lewis to achieve rates of about 700 items per hour. Magna Park’s lead time to stores now stands at about 40 hours.

“The chemistry of the way the site is designed and the partnership structure make it unique,” Munnelly says. Some 65 of the 400 full-time partners on the site previously worked at the Stevenage distribution centre. The workforce also contributes to the efficiency of the supply chain and John Lewis is focused on making work easier for its staff. Product bins are positioned lengthways for an easy reach and there is a padded area for pickers to lean

on where necessary. So, while technology and automation can increase distribution centre efficiency, a continued focus on staff also remains vital to success.

Accuracy is assisted through the use of mirrors positioned to reflect the contents of the bins. Products are photographed from the beginning of the supply chain and this follows the product through its journey. Checks such as the photograph and a written description follow the product downstream to ensure accuracy.

John Lewis has a ‘little-and-often’ strategy in place at the distribution centre. “Our strategy is ‘sell one, pick one’ for a large selection of our range. About 95% of products are sent to department stores as shelf-ready single products,” Munnelly says. Stock control is improved by this method. “In the past, we sent a large amount of warehouse packs, so a store might get 12 products instead of the three it needed to replenish the previous day’s sales. Handling residual stock required a lot of space in stores as well as additional time from sales partners,” Munnelly says.

Sending single products reduces the work of handling waste cardboard in stores. The former Stevenage distribution centre used to send products to stores wrapped in its cardboard packaging. At Magna Park cardboard packaging is stripped off, bound with baling equipment and sent off to be recycled.

“This means there is less handling in the stores and shelf replenishment is made easier. It also improves visibility of the product in the supply chain, stock control, accuracy and on-shelf availability,” Munnelly says.

Sustainable construction

Property developer Gazeley was able to suggest a range of eco-initiatives, which influenced John Lewis’s decision to award the firm the contract to build the Magna Park centre, according to Munnelly.

The structure features sustainable materials, including carpet tiles made with a high percentage of recycled fibre and Rockfon Coral ceiling tiles, made of stone wool that can be reprocessed to form other products when the building is decommissioned.

But savings on running costs were an important consideration, too. Lighting and heating are the largest source of energy consumption in a warehouse - usually accounting for between 40% and 70% energy consumption - and is an area that has been tackled.

Out of all the lighting at Magna Park, 15% comes in via roof lights, which allow optimum natural light to come through and reduces the demand for artificial lighting, Gazeley sustainability director Jonathan Fenton-Jones says. This is 5% more than a conventional building and saves 100,000kWh a year.

Some of the features work in tandem with each other, Fenton-Jones adds. The building is airtight beyond what is required by regulation. A solar thermal heating system heats 60,000 litres of water passed over ultraviolet filtration for use in the offices of the facility.

Automatic controls adjust the speed of fans when the temperature changes. Other energy initiatives planned for the facility include installation of a wind turbine and bio-fuel plant to top up the supply of electricity.

All in all, John Lewis is really showing how environmentally friendly design and technology can go hand in hand with a highly productive and flexible distribution centre.