“Customers can now order up until 11pm for next day delivery, which is certainly part of the
Waitrose.com success.”
which 70% is click and collect because people don’t want to wait at home for a delivery. If a customer places an order before 10pm it can be collected from 10am the next day at one of the 51 John Lewis department stores or at one of the 380 Waitrose stores. This is a great combination and is a great way of generating customers for Waitrose, both in store and online, as well as serving our John Lewis customers.
Another example of tapping into synergies is Magna Park, Milton Keynes where both John Lewis and Waitrose have distribution cen- tres next to each other. This is a big opportunity to share space and improve efficiencies within the transportation network by combin- ing fleets for store deliveries, replenishment etc. Thirdly, automation offers many opportunities. The John Lewis warehouse is highly automated and Waitrose isn’t. We are develop- ing plans to share knowledge and automation capability to improve efficiency of the Waitrose warehouses.”
Which supply chain challenges keeps you awake at night? “Brexit overshadows everything at the moment. Like the rest of the industry we are struggling with it because no one knows exactly what is going to happen therefore we have to plan for the worst and hope for the best. We are putting in risk factors related to Brexit within our normal operating plans: how it might affect costs and how it might seriously affect profitability next year. A ‘hard Brexit’ will certainly impact on-shelf availability and product choice. A recent question to supply chain directors on the ECR board of IGD showed that nearly 80% expect a hard Brexit on 29 March 2019 but only 15% said they were prepared for it. Brexit threatens business moving forward so a longer period of transition would be a big relief.”
46 What do you do about these challenges?
“Regarding Brexit, we are working on two main aspects: From a commercial perspective we are asking suppliers what they are doing regards foreign exchange risks and collecting upfront state- ments from preferred importers on how they are preparing for cus- toms declarations if the UK is no longer part of the customs union.
From a supply chain perspective we are working on three main areas: Firstly, we anticipate an increasing shortage of labour because, even since the Referendum, it has become increasingly difficult to get workers, especially drivers. A significant number are of eastern European origin and in future we cannot rely on their availability. Also a significant number of warehouse employees are temporary/agency workers largely from outside the UK. We are currently rebalancing our partner:agency ratio from 70:30 to 85:15 and have already halved the number of agency workers. Also, Amazon, one of our main competitors, has just announced an increase in the minimum wage in the London area to GBP10.50 per hour (GBP9.50 for rest of the country) as well as significant overtime premiums. We are currently formulating a response to deal with this matter. Secondly, a ‘hard Brexit’ is likely to lead to extra border controls that could slow down transportation times. Waitrose does cham- pion British produce but home grown versus imported produce is roughly 50:50 depending on product category and time of year, so we are still very dependent on imports. To cope with the time uncertainly of crossing the border we need to ensure that we have stock already in place so we are currently work- ing with 3PLs to ensure continuity of supplies. However, we cannot stockpile fresh produce, such as strawberries that in early spring we have to import from Spain or Portugal. Cur- rently we can have this produce on our shelves within 24 hours of packing but with new customs clearance and border controls this could stretch to a few days. This is why we are working with suppli- ers to ensure they have procedures in place to help reduce friction at the border.
All in all we expect rough times ahead so it’s our strategy to invest now for the long term. That is the advantage of the partnership. We don’t have to reach quarterly goals set by shareholders but instead the partnership allows us to plan much further ahead so we have continuity. That’s why, since I joined Waitrose, I’ve emphasised the need to improve tools in the supply chain, as these were very archaic. As a result we’ve invested in off-the-shelf, state-of the art tools such as Paragon’s route planner; C3 Solutions yard management and dock scheduling; Fourtec Microlise for continuous tracking of vehicle location, status and performance; and additional software to give customers a more accurate time slot so they can order later. Cus- tomers can now order up until 11pm for next day delivery, an ele- ment which is certainly part of the
Waitrose.com success. Also, our transportation management system was 25 years old so we are in the process of rolling out a new system which will go live in Febru- ary.”
What do you expect to be doing professionally in 5 years? “In five years I’d like to be talking about efficiency in the partner- ship supply chain, applying synergies, and serving customers in all the channels they want to be served. We also need to know what to do with the excess retail space on the high street and a strong com- ponent of this will be connected to supply chain.”
SUPPLY CHAIN MOVEMENT, No.31, Q4 2018
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