bins that can hold up to eight different SKUs in a single tote. These totes are designed to hold slow-moving
SKUs that typically move in small quantities, Murphy
explains.
When the company needs to replenish items for a
store, tote bins holding the appropriate stock come
out of storage and travel to a packing station. There,
the computer system instructs a partner to remove one
item—a pair of socks, say—from the stock bin and
place the item in a second bin, which is destined for a
particular store. The second bin could then travel on
a conveyor to another station, where a partner adds
another item destined for the same store. When the
bins are complete, they go to the loading dock that has
been assigned for deliveries to a particular store. This
system not only makes order fulfillment more efficient
by keeping items for a specific retail location together, it
also facilitates restocking at those stores. That’s because
the computer system “knows” the retail stores’ layouts
and groups items in the shipping bins to reduce walk
time for partners when they set out merchandise for
sale, Murphy explains.
Because Magna Park I was designed as a hybrid facility, partners can also fill direct-to-consumer orders. For
those orders, a partner takes the item ordered online
out of the stock bin, scans it, and places it in a cardboard shipping carton. The carton then travels down a
conveyor to an automated packaging machine, which
places a note to the customer in the carton. The packaging system then automatically measures the product
inside the carton and folds the box to the proper height.
If the consumer requests home delivery, the order is
shipped to the customer’s door by one of two parcel
carriers, Hermes or City Link. If the order is intended
for customer pickup at a retail outlet, then it travels
on the same truck as store replenishment orders to a
John Lewis branch location. John Lewis’ own fleet of
trucks with multideck trailers transports about 85 to
90 percent of store-delivered items, with the remainder
delivered by local for-hire carriers.
For home delivery of large items like furniture or
appliances, John Lewis uses its own specialized delivery vans. Customers may select a two-hour delivery
window online, and the retailer uses software from
Descartes Systems Group to optimize truck routing.
The Descartes application also lets customers book
delivery appointments on the website or at the point of
sale in the store.
A DEMAND-DRIVEN FUTURE
In concert with its omnichannel strategy, John Lewis
is moving in the direction of a demand-driven supply
chain. Murphy is confident in the retailer’s ability to
achieve that objective. “Given the geography of the
U.K., we can deliver to every one of our stores within
12 hours, so a demand-driven operation is eminently
feasible,” he says.
However, since the retailer has adopted the sell-one-replenish-one strategy that has allowed it to reduce the
size of the backrooms in its stores, it now holds less
buffer inventory at its retail outlets. That requires the
company to have a better handle on demand fluctuations. Toward that end, John Lewis will be upgrading
its software. At present, sales orders from the shops are
fed into a proprietary system that determines replenishment requests to be sent to the DCs. But John Lewis will
soon adopt Oracle software as its platform, which the
retailer expects will enable it to take better advantage of
demand data to create a more responsive supply chain.
For example, the new software could provide advance
notification of spikes in customer orders.
The ability to quickly respond to demand could
become even more crucial as online sales continue to
grow and more customers demand faster deliveries
of their orders. Murphy notes that four years ago, 26
percent of the retailer’s online orders required next-day
delivery; so far this year, 65 percent fit that profile.
John Lewis is looking at further raising the bar
for consumer deliveries. A trial program now under
way provides same-day delivery at its Birmingham
store, which is located above a major railway station.
Commuters who place an order by 9: 30 a.m. will be able
to pick up their items in that store on their way home
from work, after 5:00 p.m.
The new network design will help John Lewis provide
faster fulfillment and delivery of online orders, and it
will enable implementation of demand-driven replenishment for its stores. The hybrid distribution network,
Murphy sums up, “allows us to concentrate our inventory in one, purpose-built location, with the ability to
switch stock, immediately and virtually, between shop
and online.” With all those capabilities in place and
working smoothly, John Lewis aims to maintain its
position as a leader in omnichannel commerce. c
JAMES A. COOKE WAS FORMERLY EDITOR OF
CSCMP’S SUPPLY CHAIN QUARTERLY.
