Thursday 17th Aug 2017 - Logistics & Supply Chain

ASOS mechanises picking to cut unit cost

ASOS has launched a mechanised picking solution at its Barnsley warehouse, as part of a plan to reduce its labour cost per unit to 50p.

Last year the retailer invested £32.1m  in its global warehousing infrastructure. At Barnsley it has built two extensions, added additional storage and developed our mechanised picking solution to provide capacity for sales of £1.5bn.

Due to disruption during this period of infrastructural improvement, labour cost per unit in Barnsley facility increased by 19 per cent to 75p (2013: 63p), “which we expect to reduce during the new financial year as we begin to realise the benefits of our mechanised picking solution. We continue to target a medium-term labour cost per unit of 50p in this warehouse”.

Ultimately, it said the investment would provide it with a global warehousing infrastructure with capacity for annual sales of £2.5bn across warehouses in the UK, China, the US and Europe.

The investment in mechanised picking would improve the per-person picking capability from some 65 units per hour to approximately 200 units per hour, delivering significant operational cost savings, it said in its annual results for the year to 31st August.

ASOSdcBarnsley
The ASOS warehouse at Barnsley.

ASOS also opened a new returns processing facility in Selby, North Yorkshire as well as an offsite storage facility at Lister Hills near Bradford which it will wind down during the first half of the new financial year.

Operations at Barnsley were disrupted by a fire in June. ASOS said it was able to recommence trading within two days. The warehouse is now functioning as before the fire and to date we have received £11.5m insurance receipts covering costs plus a portion of business interruption losses, with further business interruption reimbursements expected.

The retailer has also started operations at its first European warehouse (‘Eurohub’) in Grossbeeren, Germany and returns processing centre in Swiebodzin, Poland.

It said the warehouse in the US now fulfilled over 20 per cent of US orders and operation in China continues to develop.

Group sales, at £975m, were up 27 per cent for the year, while pre-tax profit was up 14 per cent at £47m.

* The fire at the ASOS warehouse is a textbook example in the importance of having an effective disaster recovery plan in place across your organisation’s supply chain, to ensure business continuity, according to Jonathan Gibson, head of logistics at supply chain consultancy firm Crimson & Co.

“In ASOS’s case, its Barnsley distribution centre housed 70 per cent of the firm’s entire stock; the fact that only 20 per cent was impacted demonstrates that an effective disaster recovery review had been undertaken.

“A lot of organisations feel that business continuity planning can be an unnecessary, costly exercise but in the face of disaster the cost of not having a plan in place could be devastating. It’s imperative that plans are regularly reviewed and practiced to ensure that they can be implemented effectively during a disaster,” he said.

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